How Do I Draw Fibonacci Expansion Levels?
How Do I Draw Fib Expansion Levels?
Traders use Fib extension levels to estimate where the trend movement will reach. There are two commonly used Fib extension levels - 61.8% Fibonacci Expansion Level and 100 % Fibonacci Expansion Levels, these fibonacci expansion levels are used for setting tp order levels.
To draw Fibonacci Expansion levels on the trading chart we wait until the price retracement is complete & price starts to move in original direction of the trend. Where the price retracement reaches is used as chart point 3. Fibonacci Expansion Technical Indicator is drawn using three chart points as illustrated on the Fib extension examples illustrated & explained below of how to draw the Fib Expansion Technical IndicatorTool.
The Fibonacci expansion example illustrated & explained below portrays the 3 Points where the Fibonacci extension technical indicator is drawn, labeled as XAUUSD Chart point 1, Gold Chart point 2 and XAUUSD Chart point 3.
Gold Point 1 is where the market trend started, Gold Point 2 is where the market trend pulled back and retraced & Gold Point 3 is where the retracement reached as illustrated on the Fibonacci Expansion Technical Indicator Tool examples illustrated & explained below.
How Do I Draw Fib Extension Levels? - How Do I Draw Fib Expansion Levels?
Please note where these Fib Extension levels are drawn - Fibonacci Expansion areas are drawn above the Fibonacci technical indicator, these are the chart points where a trader will set gold takeprofit orders using these Fib Expansion Levels - 61.8% and 100.0% Fibo Extension Levels.
Drawing Fib Extension Levels on an Upward Trend
We use Fibonacci extension levels to estimate where trend move will reach. There are two commonly used Fibonacci expansion levels: 61.8% XAUUSD Fib Expansion Level & 100% Fib Extension Level, these Fib Expansion Levels are used for taking profit.
On the Fib expansion indicator example depicted and explained below you can see that the Fibonacci expansion technical indicator tool is drawn along the direction of the trend, since the trend is upwards - the Fibonacci expansion levels indicator is drawn upward.
These Fibonacci extension levels are displayed as horizontal lines above Fib Extension Technical Indicator, showing profit taking areas. In the example illustrated and described below if you had used the 100.00 % Fibo expansion level the you would have made a good profit from this trade setup.
Drawing Fibonacci Extension Zones Indicator in an Upwards Trend
From the above Fib extension technical indicator examples, the upward trend continued & both 61.80 % and 100.0 % Fibo expansion levels were all hit after which xauusd price retraced again after getting to the 100.0% Fibonacci Expansion level.
Drawing Fib Expansion Levels on a Downwards Trend
Since we use the Fibonacci expansion indicator tool to estimate gold takeprofit areas, how do we draw Fib Expansion in a down ward trend?
We draw the Fib expansion indicator tool from chart point 1 to chart point 2 to chart point 3 as illustrated on the Fibonacci extension examples illustrated & explained below. Remember we always draw this Fibonacci extension tool in direction of the price trend. In the Fibonacci expansion examples illustrated & described below, can you determine what direction we've drawn it? That's right - downwards direction.
Try and spot the difference between how we have plotted Fibonacci extension levels indicator above and how Fib Extension levels trading indicator is drawn below. This time you'd also have used Fibonacci expansion area 100.00%, just where price reached as displayed on the Fibonacci expansion levels trading example depicted and explained below. This would have been a good gold tp order area.
Drawing Fib Expansion Zones Trading Indicator in a Downward Trend
From the Fib expansion levels trading indicator example above, after drawing this Fibonacci expansion levels trading tool there are 2 levels which are used to show the profit taking areas - these two Fibonacci expansion levels are drawn as horizontal lines across the price chart marked as 61.8% XAUUSD Fibonacci Extension Level & 100% Fib Expansion Level.
How Do I Draw Fib Extension Levels
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