#STUDY: Stocks Technical Analysis, How To Trade With Fibonacci Extension? | #YHOO

Fibonacci Retracements and Fibonacci Extensions are the two main charts I use on my stocks technical analysis.

Last week, I showed you how to trade using Fibonacci Retracements. I will show you this time how to trade using Fibonacci Extension using a live example of my trade with YHOO. Fibonacci Extension in theory, is the prediction of the future price of stock where traders usually buy or sell for profits.

The main price extension levels are 100%, 161.8%, and so on. The reason why you see stocks accurately rise or fall on those levels is due majority of traders looking at the same Fibonacci chart where they take action whether to buy or sell to take profits.

How I traded YHOO with a target of $40 using Fibonacci Extension:

When YHOO started to trade higher at $37 area on November 27, I looked at the chart and saw the possibility of reaching $40 using the Fibonacci Extension.

You have 3 points in Fibonacci Extension:

• A - previous low
• B - previous high
• C - support price level

If you look at the chart above you can see how I plotted A, B, and C. That plot will show you the Fibonacci Extension price levels where $40.22 just sits at 100%. And that was the target.

As you can see, YHOO reach $40.22 today and is actually trying to go higher.

Alert posted Nov. 27: Fibonacci says #YHOO could hit $40 soon

Also read: How To Trade Using Fibonacci Retracements | #FB #TSLA

Past trading performance:

• Weekly Options Trading Recap Ending Dec. 6
• Weekly Options Trading Recap Ending Nov. 29