How to Draw Fibonacci Extension Levels

How Do I Trade Indices and Draw Fibonacci Extension Levels?

Traders use Fib extension levels to gauge/estimate where the trend movement will get to. There are 2 commonly used Fib extension levels - 61.8% Fib Extension Level & 100 Percent Fib Expansion Levels, these Fib extension levels are used for setting takeprofit levels.

To draw Fib Extension zones on the chart we wait til the price retracement is complete and the price begins heading in original direction of trend. Where the price pull back gets to is used as point 3. Fibo Extension Technical Indicator is plotted using three chart points as illustrated on the Fib extension example explained below of how to plot the Fib Extension Indicator.

The Fib extension example explained & illustrated and shown below shows the three Chart Points where the Fib extension indicator is drawn, labeled as Point 1, Chart point 2 & Chart point 3.

Point 1 is where trend started, Point 2 is where trend pulled back and retraced & Chart point 3 is where the retracement reached as portrayed on the Fib Expansion Technical Indicator examples expounded & illustrated below.

How to Draw Fib Extensions - How to Draw Fib Extensions - How Do I Draw Fib Expansion Levels?

How Do I Draw Fibonacci Extension Levels?

Please note where these Fib Expansion levels are drawn - Fib Expansion levels are plotted above the Fibo indicator, these are the stock chart areas where a trader will place the take profit orders using these Fibo Extensions - 61.8% and 100.0% Fibo Expansion Areas.

Drawing Fib Expansion Zones on an Upwards Trend

We use Fib extension levels to gauge/estimate where trend move will get to. There are 2 commonly used Fib extension levels: 61.8% Fibo Extension Level and 100% Fib Expansion Level, these Fibo Expansions are used for taking profit.

On the Fib extension technical indicator example explained & illustrated and shown below you as a trader can see that the Fib extension indicator is plotted along the direction of the trend, since the trend is upwards - the Fib extension levels indicator is drawn upwards.

These Fib extension levels are shown as horizontal lines above Fibo Expansion technical indicator, showing booking profit levels. In the illustration explained below if you had used the 100.00% Fib extension level you would have made nice profit from the trade transaction set-up.

How Do You Draw Fib Expansion Levels?

Drawing Fib Expansion Areas Trading Indicator in an Upward Trend

From the above Fib extension technical indicator example, upwards trend continued & both 61.8% & 100.0% Fib extension levels were all hit after which the price retraced again after getting to the 100.00 % Fibo Extension zone.

Drawing Fib Expansion Levels on a Downwards Trend

Since we use the Fib extension indicator to gauge/estimate take profit levels, how do we draw Fibonacci Extension in a downward trend?

We draw the Fib extension indicator from chart point 1 to chart point 2 to chart point 3 as illustrated on the Fib extension example explained below. Remember we always draw this Fib extension tool in direction of the trend. In the Fib extension example explained & illustrated and shown below, can you figure what is the direction which we've drawn it? That's right - downwards direction.

Try & identify the difference between how we have drawn Fibonacci extension levels trading indicator above & how Fib Expansion levels indicator is drawn below. This time you'd also have used Fib extension level 100.0%, just where the price reached as displayed on the Fib extension levels illustration explained & illustrated and shown below. This would have been a good take profit level.

How Do I Trade Indices and Draw Fibonacci Expansion Levels?

Drawing Fib Expansion Areas Trading Indicator in a Downwards Trend

From the Fib extension levels indicator example set-out above, after plotting this Fib extension levels tool there are 2 levels which are used to illustrate the profit booking areas - these 2 Fib extension levels are drawn as horizontal lines across the price chart labeled and marked as 61.80% Fib Expansion Level and 100% Fibo Extension Level.

How Do I Draw Fibonacci Extension Zones

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How to Draw Fibonacci Extension Levels

How Do I Trade Indices and Draw Fibonacci Extension Levels?

Drawing Fib Expansion Zones on an Upwards Trend

Drawing Fib Expansion Levels on a Downwards Trend