How Do I Stock Trade With Stock Trading Fibonacci Extension?
Stocks Trading Fibonacci Extension Levels Trading Strategies in Stocks Trading
Fib extension levels indicator is drawn using 3 chart points.
To draw Stock Trading Fibo Extension zones we wait until the stocks price retracement is complete and the stocks price starts to move in the original direction of the Stock trend. Where the retracement reaches is used as chart point 3.
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, 2 and 3. Chart point 1 is where the stock trend started, Chart point 2 is where the stock trend pulled back & retraced and Chart point 3 is where the stock retracement reached as displayed on the Stock Trading Fibo Extension Indicator examples illustrated and described below.
How Do I Stock Trade With Stock Trading Fibonacci Extension?
Please note where these Stock Trading Fibo Extension areas are drawn - Stock Trading Fibo Extension areas are plotted above Fibonacci Indicator, these are the points where the trader will place the takeprofit orders using these Stock Trading Fibo Extension Levels - 61.8% & 100% Stock Fibonacci Extension Areas.
Drawing Stock Trading Fibonacci Extension Areas Indicator on an Upwards Stocks Trend
We use Fibonacci extension levels to estimate where the stock trend movement will reach. There are Two important Fibo extension levels: 61.8% & 100% Stock Fibonacci Extension Levels, these are used for profit taking.
On the Fibonacci extension example illustrated and explained below you can see that the Fibonacci extension technical indicator is plotted along the direction of the stock trend, since the stock trend is upward - the Fibonacci extension is also drawn upwards.
These Fibonacci extension levels are displayed as horizontal lines above Stock Trading Fibo Extension technical indicator, showing profit taking areas. In the stocks example illustrated & explained below if you had used 100% Fibonacci extension you would have made good profit from using this trading setup.
Drawing Stock Trading Fibonacci Extension Areas Indicator on an Upward Stock Trend - Stock Trading Fibonacci Extension Indicator Levels Strategies in Stock Trading
From the above Fibonacci extension examples, the upward stock trend continued and both 61.8% & 100.00% Fibonacci extension levels were all hit after which stocks price retraced again after hitting the 100.0 % Stock Fibo Extension level.
Drawing Stock Trading Fibonacci Extension Levels Technical Indicator on a Downward Stock Trend
Since we use this Fibonacci extension indicator to estimate 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 stocks trend. In the Fibonacci extension 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 the Fibo extension above & how Stock Trading Fibonacci Extension is drawn below. This time you would also have used Fibonacci extension 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 Fibonacci Extension Areas Indicator on a Downward Stock Trading Trend
From the Fibonacci extension example above, after plotting this Fibonacci extension tool there are two levels that are used to show the profit taking areas, these two Fibonacci extension levels are drawn as horizontal lines across the stock trading price chart.
