How to Draw Gold Trading Fib Extension on Downward Gold Trend

Drawing Fibonacci Extension Levels on a Downward XAUUSD Trend

We draw the Fibonacci Extension indicator tool from chart point 1 to chart point 2 to chart point 3 as shown on the xauusd trading example illustrated and explained below. Remember we always draw this Fibonacci Extension tool in the direction of the xauusd trend. In the Fibonacci Extension example illustrated and explained below, can you figure what direction we have drawn it? That is right - downward direction.

As a gold trader you would also have used Fibonacci Extension level 100.0%, just where the xauusd price reached as shown on the Fibonacci Extension example illustrated and explained below. That would have been a good take profit area.

How to Draw Gold Trading Fib Extension on Downward Gold Trend

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

Explanation of How to Draw Fibonacci Extension Levels on XAUUSD Charts

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

To draw Fibonacci Extension levels on the gold chart we wait until the xauusd price retracement is complete and the xauusd price starts to move in the original direction of the Gold trend. Where the xauusd price retracement reaches is used as chart point 3. Fibonacci Extension Indicator tool is drawn using three chart points as shown on the xauusd trading example illustrated and explained below of how to draw the Fibonacci Extension Indicator Tool.

The Fibonacci Extension example illustrated and explained 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 gold trend started, Chart point 2 is where the gold trend pulled back and retraced and Chart point 3 is where the gold retracement reached as shown on the Fibonacci Extension Indicator Tool example illustrated and explained below.

How to Draw Fibonacci Extension Gold Technical Indicator on Downwards Gold 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 gold trader will set the take profit orders using these Fibonacci Extension Levels - 61.8% Fibonacci Extension Level and 100.0% Fibonacci Extension Level.