How to Draw Fib Expansion Trading Indicator on Charts

We use Fibonacci extension areas to try to project where trend move will reach. There are two important Fib expansion areas: 61.8% & 100% Fib Expansion Levels, these are used for profit taking.

To draw Fib Expansion levels on the stock chart we wait til the stock trading price retracement is complete & trading price begins heading in original direction of the trend. Where the stocks price pull back gets-to is used as point 3. Fib Expansion Technical Indicator is plotted using three chart points as displayed on the stock example explained below of how to plot the Fibo Expansion Technical IndicatorTool.

The Fib expansion examples described below shows the Three Chart Points where the Fib expansion indicator is drawn, marked as Chart point 1, Chart point 2 & Chart point 3.

Chart point 1 is where trend started, Chart point 2 is where trend pulled back and retraced & Chart point 3 is where the stock retracement reached as portrayed on the Fibo Extension Technical Indicator Tool example explained below.

Fib Expansion Strategy using Fib Expansion Levels

How to Trade with Fib Expansion? - How to Draw Fib Expansion Levels on Charts

Please note where these Fibo Extension levels are drawn - Fibonacci Expansion levels are plotted above the Fib indicator, these are the chart levels where a trader will place take profit orders using these Fibo Expansion Levels - 61.8% and 100.00% Fibo Extension Levels.

Drawing Fibonacci Expansion Levels on an Upwards Trend

We use Fibonacci expansion areas to try to project where trend move will reach. There are two important Fibonacci expansion areas: 61.8% Fibonacci Expansion Level & 100 % Fibo Expansion Level, these Fib Expansion Levels are used for taking profit.

On the Fib expansion indicator example explained and illustrated below you can see that the Fibonacci expansion indicator is plotted along the direction of the trend, since the trend is upwards - the Fibonacci expansion indicator is drawn upwards.

These Fib extension levels are shown as horizontal lines above Fib Expansion technical indicator, showing profit booking zones. In the stock trading example illustrated below if you had used the 100.00% Fib expansion level the you would have made good profit from the trade set-up.

Drawing Fib Expansion Technical Indicator in an Upward Trend - How Do I Draw Fib Expansion?

Drawing Fibo Expansion Technical Indicator in an Upward Trend - Fibo Expansion Tool

From the above Fib extension technical indicator example, upward trend continued & both 61.8 % and 100.0 % Fib expansion levels were all hit after which price retraced again after getting to the 100.00 % Fibo Expansion level.

Drawing Fib Expansion Areas on a Downwards Trend

Since we use the Fibonacci extension technical indicator tool to estimate tp order zones, how do we draw Fib Expansion in a downwards trend?

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

Try and identify the difference between how we've drawn Fibonacci expansion indicator above and how Fibo Expansion tool is plotted below. This time you'd also have used Fib extension area 100.00%, just where the stock trading price reached as displayed on the stock trading examples explained below. That would have been a good take-profit zone.

Fibo Expansion Strategies in Stock Indices Trading

Drawing Fibo Extension Technical Indicator in a Downward Trend - Fibo Expansion Tool

From the Fib extension technical indicator example above, after drawing this Fibonacci extension tool there are two levels which are used to show the profit booking zones, these two Fib extension levels are plotted as horizontal lines across the stock price chart marked as 61.8 percent Fib Expansion Level & 100 % Fibo Extension Level.

Study More Tutorials & Courses:

Trade Stock Indices

How to Draw Fib Expansion Trading Indicator on Charts

Drawing Fibonacci Expansion Levels on an Upwards Trend

Drawing Fib Expansion Areas on a Downwards Trend