How to Draw Fibonacci Extension Indicator Tool on Upwards Indices Trend

How Do I Draw Fibonacci Extension for Indices Uptrend?

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

On the Fibonacci Extension indicator example explained and illustrated below you can see that the Fibonacci Extension indicator tool is drawn along the direction of the indices trend, since the indices trend is up - the Fibonacci Extension indicator is drawn upwards.

These Fibonacci Extension levels are displayed as horizontal lines above the Fibonacci Extension indicator, showing profit taking areas. In the stock indices trading example explained and illustrated below if you had used of 100.0% Fibonacci Extension level you would have made nice profit from the trade setup.

How to Draw Fibonacci Extension on Up Indices Trend

From the above Fibonacci Extension indicator tool example, the upward indices trend continued and both 61.8% and 100.0% Fibonacci Extension levels were all hit after which the stock indices price retraced again after getting to the 100.0% Fibonacci Extension level.

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

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

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

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

The Fibonacci Extension example explained and illustrated below shows the 3 Chart Points where the Fibonacci Extension 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 Extension Indicator Tool example explained and illustrated below.

How to Draw Fibonacci Extension Indicator Tool on Upwards Indices Trend

Please note where these Fibonacci Extension levels are drawn - Fibonacci Extension 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 Extension Levels - 61.8% and 100.0% Fibonacci Extension Levels.