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