How to Draw Stock Trading Fibonacci Extension
How Do I Use Stock Fibo Extension Areas Technical Indicator on Stocks Chart?
We use Stock Fibonacci Extension Levels to estimate where the stock trend movement will reach. There are Two important Stock Trading Fibo Extension levels: 61.8% and 100% Stock Fibonacci Extension Levels, these are used for profit taking.
To draw Stock Trading Fibo Extension levels on stock chart we wait until the stocks price retracement is complete and the stocks price starts to move in original direction of the Stock trend. Where the stocks price retracement reaches is used as chart point 3. Stock Trading Fibo Extension Technical Indicator is plotted using Three chart points as illustrated and shown on the stocks trading example illustrated & explained below of how to plot the Stock Fib Extension Technical Indicator.
The Stock Fibo Extension examples illustrated and described below shows the 3 Chart Points where the Stock Trading Fib Extension technical indicator is plotted, marked as Chart point 1, Chart point 2 and Chart point 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 Fib Extension Technical Indicator Tool examples illustrated and described below.
How to Trade With Stock Fibonacci Extension - How to Draw Stock Fibo Extension Areas Technical Indicator on Stock Charts
Please note where these Stock Trading Fibo Extension areas are drawn - Stock Trading Fibo Extension areas are drawn above Fibonacci indicator, these are the chart points where a trader will set the takeprofit orders using these Stock Trading Fibo Extension Levels - 61.8% and 100.0% Stock Fibonacci Extension Areas.
Drawing Stocks Fibo Extension Areas Technical Indicator on an Upward Stock Trend
We use Stock Fibonacci Extension Levels to estimate where the stock trend movement will reach. There are Two important Stock Fibonacci Extension levels: 61.80% Stocks Fibo Extension Level & 100% Stock Fibonacci Extension Level, these Stock Fibonacci Extension Levels are used for profit taking.
On the Stock Trading Fib Extension indicator example illustrated and explained below you can see that the Stock Trading Fib Extension tool is drawn along the direction of the stock trend, since the stock trend is upward - the Stock Fib Extension technical indicator is drawn upwards.
These Stock Trading Fibo Extension levels are shown as horizontal lines above the Stock Trading Fibo Extension technical indicator, showing the profit taking areas. In the stocks trading examples illustrated and described below if you had used the 100.0% Stock Trading Fibo Extension level the you would have made a nice profit from the trade set up.
Drawing Stock Trading Fibo Extension Indicator on an Upwards Stock Trend - Stock Trading Fib Extension Trading Tool
From the above Stock Trading Fib Extension indicator examples, the upwards stock trend continued and both 61.8% & 100.0% Stock Fibonacci Extension levels were all hit after which stocks price retraced again after getting to the 100.0% Stock Trading Fibo Extension level.
Drawing Stocks Trading Fibonacci Extension Levels on a Downward Stocks Trend
Since we use the Stock Trading Fib Extension indicator tool to estimate take profit levels, how do we draw Stock Trading Fibo Extension in a downwards Stock trend?
We draw the Stock Trading Fibo Extension tool from chart point 1 to chart point 2 to chart point 3 as illustrated and shown on stocks trading examples illustrated and described below. Remember we always draw this Stock Trading Fib Extension tool in direction of the stocks trend. In the Stock Trading Fib Extension examples illustrated & explained below, can you determine what direction we have drawn it? That's right - downward direction.
Try & identify the difference between how we have plotted Stock Fib Extension indicator above & how Stock Fibonacci Extension technical indicator is drawn below. This time you would also have used Stock Trading Fib Extension level 100.0%, just where the stocks price reached as illustrated on the stocks trading examples illustrated and described below. That would have been a good take profit area.
Drawing Stock Trading Fib Extension Technical Indicator on a Downward Stock Trend - Stock Trading Fib Extension Trading Tool
From the Stock Trading Fib Extension indicator example above, after plotting this Stock Trading Fibo Extension tool there are two levels that are used to show the profit taking areas, these 2 Stock Trading Fibo Extension areas are drawn as horizontal lines across the stock price chart marked as 61.80% Stocks Fibo Extension Level & 100% Stock Fib Extension Level.
