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What is the Difference between Indices Trading Fibonacci Retracement and Indices Trading Fibonacci Extension?


How to use Indices Trading Fibonacci Retracement and Extension and the Difference between Indices Trading Fibonacci Retracement and Extension


Indices Trading Fibonacci Retracement Levels

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


Indices Trading Fibonacci Retracement Level 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 indexes price retraces then it continues moving upward in the original upward indices trend. Note that this Indices Trading Fibonacci Retracement Levels indicator is drawn from Chart point 1 to Chart point 2 in the direction of the stock indexes trading market trend.

Indices Trading Fibonacci Retracement Levels

Indices Trading Fibonacci Retracement Levels - How to Draw Indices Trading Fibonacci Retracement Levels



Indices Trading Fibonacci Extension Levels

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


To draw these Indices Trading Fibonacci Extension levels we wait until the stock indexes price retracement is complete and the stock indexes price starts to move in the original direction of the Indices trend. Where the retracement reaches is used as chart point 3 for Fibonacci extension.


The Indices Trading Fibonacci Extension example explained and illustrated below shows the 3 chart Points where the Indices Trading Fibonacci Extension 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 Indices Trading Fibonacci Extension example explained and illustrated below.

Indices Trading Fibonacci Extension Levels

Indices Trading Fibonacci Extension Levels - How to Draw Indices Trading Fibonacci Extension Levels


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

 

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