How to Draw Fibonacci Extension Levels on Downward Indices Trend

How Do I Trade Indices and Draw Fibonacci Extension Levels on Downward Indices Trend?

We draw the Fibo Extension indicator tool from chart point 1 to chart point 2 to chart point 3 as displayed on the Fibonacci extension indices examples explained below. Remember we always plot this Fibonacci Extension tool in direction of the stock indices trend. In the Fibonacci Extension example explained and illustrated below, can you figure what's the direction which we have plotted it? That's right - downward direction.

As a trader you would also have used Fibonacci Extension level 100.0%, just where the stock indices price reached as illustrated on the Fibonacci Extension example explained and illustrated below. That would have been a good indices take profit area.

How to Draw Fibo Extension Levels on Downward Indices Trend?

From the Fibonacci Extension tool example above, after plotting this Fibonacci Extension indicator tool there are 2 levels that are used to show the indices profit taking levels - these two Fibonacci Extension levels are represented as horizontal lines across the stock indices chart marked as 61.8% Stock Indices Fibonacci Extension Level and 100% Fibonacci Extension Level.

Interpretation of How Do I Draw Fibonacci Extension Levels on Stock Indices Charts?

Indices traders Fibonacci Extension levels to estimate where the stock indices price movement will reach. There are 2 commonly used Fibo Extension areas: 61.80% Fibonacci Extension Level and 100% Fibonacci Extension Levels - these fibonacci extension levels are used for setting indices taking profit levels.

To draw Fibonacci Extension levels on the stock indices chart we wait until the stock indices price retracement is complete and the stock indices price starts to move in original direction of the Indices trend. Where the stock indices price retracement reaches is used as chart point 3. Fibonacci Extension Indicator is plotted using 3 chart points as illustrated on the Fibonacci extension indices examples explained below of how to plot the Fibonacci Extension Technical Indicator.

The Fibonacci Extension example explained and illustrated below shows the 3 Stock Indices Chart Points where the Fibo Extension technical indicator is drawn, marked as Stock Indices Chart point 1, Stock Indices Chart point 2 and Stock Indices Chart point 3.

Stock Indices Chart point 1 is where the indices trend started, Stock Indices Chart point 2 is where the stock indices price pulled back & retraced & Stock Indices Chart point 3 is where the indices retracement reached as displayed on the Fibonacci Extension Indicator example described & illustrated below.

How Do You Trade Indices and Draw Fibonacci Extension Levels on Downward Indices Trend?

Please note where these Fibo Extension areas are plotted - Fibonacci Extension zones are drawn above the Fibo indices indicator, these are the stock chart points where a trader will place the indices take-profit orders using these Fibonacci Extension Levels - 61.8% Fibonacci Extension Level and 100.0% Fibonacci Extension Level.

How to Draw Fibo Extension Levels on Downward Indices Trend