How to Draw Fibonacci Expansion Indicator Tool on Downwards Indices Trend

How Do I Draw Fibonacci Retracement Expansion for Indices Downtrend?

We draw the Fibonacci Expansion indicator tool from chart point 1 to chart point 2 to chart point 3 as shown on the stock indices trading example explained and illustrated below. Remember we always draw this Fibonacci Expansion tool in the direction of the indices trend. In the Fibonacci Expansion example explained and illustrated below, can you figure what direction we have drawn it? That is right - downward direction.

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

How to Draw Fibonacci Expansion on Down Indices Trend

From the Fibonacci Expansion indicator tool example above, after drawing this Fibonacci Expansion indicator tool there are two levels that are used to show the profit taking levels, these two Fibonacci Expansion levels are drawn as horizontal lines across the stock indices chart marked as 61.8% Fibonacci Expansion Level and 100% Fibonacci Expansion Level.

Explanation of How to Draw Fibonacci Expansion Levels on Stock Indices Charts

We use Fibonacci Expansion levels to estimate where the indices trend movement will reach. There are 2 commonly used Fibonacci Expansion levels; 61.8% Fibonacci Expansion Level and 100% Fibonacci Expansion Levels, these are used for setting taking profit levels.

To draw Fibonacci Expansion 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 the original direction of the Indices trend. Where the stock indices price retracement reaches is used as chart point 3. Fibonacci Expansion Indicator tool is drawn using three chart points as shown on the stock indices trading example explained and illustrated below of how to draw the Fibonacci Expansion Indicator Tool.

The Fibonacci Expansion example explained and illustrated below shows the 3 Chart Points where the Fibonacci Expansion indicator is drawn, marked as Chart point 1, Chart point 2 and Chart point 3.

Chart point 1 is where the indices trend started, Chart point 2 is where the indices trend pulled back and retraced and Chart point 3 is where the stock indices retracement reached as shown on the Fibonacci Expansion Indicator Tool example explained and illustrated below.

How to Draw Fibonacci Expansion Indicator Tool on Downwards Indices Trend

Please note where these Fibonacci Expansion levels are drawn - Fibonacci Expansion levels are drawn above the Fibonacci indicator, these are the chart points where a indices trader will set the take profit orders using these Fibonacci Expansion Levels - 61.8% Fibonacci Expansion Level and 100.0% Fibonacci Expansion Level.