How to Draw Fib Extension Levels

How Do I Trade Indices and Draw Fibonacci Extension Levels?

Traders use Fibonacci extension levels to estimate where the trend movement will reach. There are two commonly used Fib extension levels - 61.8% Fib Extension Level & 100 Percent Fib Expansion Levels, these fibonacci 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 market price pull back gets-to is used as point 3. Fibo Extension Technical Indicator is plotted using three chart points as illustrated on the Fibonacci extension example explained below of how to plot the Fibonacci Extension Indicator.

The Fib extension example explained and illustrated below shows the three Chart Points where the Fibonacci 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 Fibonacci Expansion Technical Indicator examples explained & 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 estimate where trend move will reach. There are two 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 and illustrated below you can see that the Fibonacci extension indicator is plotted along the direction of the trend, since the trend is upwards - the Fibonacci extension levels indicator is drawn upwards.

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

How Do You Draw Fib Expansion Levels?

Drawing Fibonacci Expansion Areas Trading Indicator in an Upward Trend

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

Drawing Fib Expansion Levels on a Downwards Trend

Since we use the Fibonacci extension indicator tool to estimate take profit levels, how do we draw Fibonacci Extension in a downwards trend?

We draw the Fib extension indicator tool from chart point 1 to chart point 2 to chart point 3 as illustrated on the Fibonacci extension example explained below. Remember we always draw this Fibonacci extension tool in direction of the trend. In the Fibonacci extension example explained and illustrated 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 Fib extension levels trading indicator above & how Fib Expansion levels indicator is drawn below. This time you'd also have used Fibonacci extension level 100.0%, just where the price reached as displayed on the Fibonacci extension levels example explained and illustrated 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 Fibonacci extension levels indicator example above, after plotting this Fibonacci extension levels tool there are two levels which are used to show the profit taking areas - these two Fib extension levels are drawn as horizontal lines across the price chart 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 Fib 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