How Do I Analyze Fibonacci Extension Levels?
How Do I Read Fibonacci Extension Levels in XAUUSD Trading?
Fibonacci extension levels xauusd technical indicator is drawn using 3 chart points.
To draw Fibo Extension levels we wait until the xauusd price retracement is complete & the price starts to move in original direction of the Gold trend. Where the xauusd price retracement reaches is used as chart point 3.
The Fibonacci extension xauusd trading examples illustrated and described below shows the Three Gold Chart Points where the Fibonacci extension xauusd technical technical indicator is drawn, marked as Gold Chart point 1, 2 and 3. Gold Chart point 1 is where the gold trend started, Gold Chart point 2 is where the gold trend pulled back & retraced and Gold Chart point 3 is where the price retracement reached as shown on the Fibonacci Extension Indicator xauusd example illustrated & explained below.
How Do You Trade with Fibonacci Extension?
Please note where these Fibo Extension areas are drawn - Fibonacci Extension zones are drawn above the Fibo Gold Technical Indicator, these are the points where the trader will set the gold take-profit orders using these Fibonacci Extension Levels - 61.80% and 100% Fibo Extension Areas.
Drawing Fib Extension Zones on an Upward XAUUSD Trend
We use Fib extension levels to estimate where the market trend movement will reach. There are Two important Fibonacci extension levels: 61.8% & 100% Fibonacci Extension Areas, these are used for taking profit.
On the Fibonacci extension xauusd trading example illustrated and explained below you can see that the Fibonacci extension technical indicator is plotted along the direction of the trend, since the trend is upward - the Fibonacci extension indicator is also drawn upwards.
These Fibonacci extension levels are displayed as horizontal lines above the Fibo Extension technical indicator, showing the profit taking areas. In the xauusd trading example illustrated and explained below if you had used of 100% Fibonacci extension you would have made nice profit from the gold trade setup.
Drawing Fibo Extension Zones on an Upwards Gold Trend - Fib Extension Strategies in Gold Trading
From the above Fibonacci extension gold trading examples, the upward trend continued and both 61.8% & 100.00% Fibonacci extension levels were all hit after which xauusd price retraced again after getting to the 100.0 % Fibonacci Extension level.
Drawing Fib Extension Levels on a Downwards XAUUSD Trend
Since we use this Fibonacci extension indicator tool to estimate gold take profit levels, how do we draw it in a downwards trend?
We draw the Fibonacci extension indicator from chart point 1 to 2 to 3 as shown below. Remember we always draw this Fibonacci extension tool in direction of the trend. In the Fibonacci extension xauusd trading example illustrated and explained below, can you figure what direction we have drawn it? That is right - downwards direction on the xauusd chart.
Try & identify the difference between how we have plotted the Fibonacci extension above & how Fibonacci Extension is drawn below. This time you would also have used Fibonacci extension level 100%, just where the price reached as illustrated on the xauusd trading examples illustrated and described below. That would have been a nice gold take profit area.
Drawing Fibo Extension Levels on a Downwards Gold Trend
From the Fibonacci extension xauusd trading example above, after plotting this Fibonacci extension tool there are 2 levels that are used to show the gold profit taking areas, these two Fibonacci extension levels are drawn as horizontal lines across the xauusd price chart.
How Do You Analyze Fib Extension Levels in Gold Trading?
