Trade Gold Trading

Key Differences between Fibonacci Retracement and Expansion

XAU/USD Fibonacci Retracement Levels

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

Fibonacci Retracement example shown & described below where the trend is moving down between Chart point 1 & Chart point 2, then after Point 2 the price retraces then it continues moving upward in the initial upward trend. Note that this Fib Retracement indicator is drawn from Chart point 1 to Chart point two in the direction of the market trend.

How to Use Fibonacci Retracement Levels as a Technical Indicator on MT5 Software

Fibonacci Retracement Levels - How to Draw Fibonacci Retracement Zones

Gold Fibo Extension Levels

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

To plot these Fibonacci Expansion zones, one must wait until the price retracement phase is concluded and the market resumes movement in the trend's original, initial direction. The point reached by the market retracement serves as point 3 in the chart coordinates for the Fibonacci expansion calculation.

The Fibonacci Expansion exemplification shown & described below displays the 3 chart Points where the Fib Expansion indicator is plotted, labeled as point 1, 2 & 3. Point 1 is where trend begun, Point 2 is where trend pulled back & retraced & Chart point 3 is where the market retracement reached as shown in Fibonacci Extension exemplification shown and explained below.

How to Draw Fibo Indicator in Down Trend Trading Price Chart

Fibo Expansion Levels - How to Draw Fibo Extension Levels

Observe where Fibonacci Expansion levels are plotted. These levels appear above the Fib Expansion indicator and are typically used by traders to set profit-taking targets.

More Guides & Courses:

Gold Broker