What is the Difference between Stock Index Fibonacci Retracement and Indices Fibonacci Expansion?

Fibonacci Retracement Levels

Fibonacci retracement is drawn between 2 chart points but Fibonacci expansion is drawn using 3 chart points.

Fibonacci Retracement example explained and illustrated below where the indices trend is moving down between Chart point 1 and Chart point 2, then after Chart point 2 the stock indices price retraces then it continues moving up in the original upward indices trend. Note that this Fibonacci Retracement indicator is drawn from Chart point 1 to Chart point 2 in the direction of the indices trend.

Fibonacci Retracement Levels - How to Draw Fibonacci Retracement Levels

Fibonacci Expansion Levels

Fibonacci retracement is drawn between 2 chart points but Fibonacci expansion is drawn using 3 chart points.

To draw these Fibonacci Expansion levels 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 retracement reaches is used as chart point 3 for Fibonacci expansion.

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, 2 and 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 retracement reached as shown on the Fibonacci Expansion example explained and illustrated below.

Fibonacci Expansion Levels - How to Draw Fibonacci Expansion Levels

Please note where these Fibonacci Expansion levels are drawn - Fibonacci Expansion levels are drawn above the Fibonacci Expansion indicator, these are the points where a indices trader will set the take profit orders.