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How to Draw Fibonacci Expansion Levels on Upward Bitcoin Trend & Downward Bitcoin Trend

We've looked at Fibonacci retracement in the previous learn Bitcoin trading lesson, drawn between 2 chart points. But to plot Fibonacci expansion levels we use 3 chart points.

To draw these levels we wait until the price retracement is complete and the BTCUSD cryptocurrency begins to move in the original direction of the Bitcoin price trend. Where the pull-back gets to is used as point 3.

The example laid-out below shows the 3 Points where the Fibonacci extension levels technical indicator is drawn - labeled & marked as 1, 2 and 3. Point 1 is where the market trend started, Point 2 is where the market trend started to be pulled back & retraced and Point 3 is where the price retracement reached as shown on the example laid-out below.

Drawing Fib Expansion Levels on Upward Bitcoin Trend & Downward Bitcoin Trend

BTC/USD Crypto Fibonacci Expansion Areas

Please note where these Fibonacci expansion levels are plotted - they are drawn above the Fibonacci extension technical indicator, these are the areas where trader will set takeprofit orders.

Drawing Fibonacci Expansion Levels on an Upward Bitcoin Price Trend

We use Fibonacci extension levels to estimate/gauge where the price movement will reach. There are 2 important Fib extension levels: 61.8 % Fibonacci expansion level and 100 % Fib expansion level, these technical levels are used for taking profit.

On the example below you as a trader can see that the Fibonacci extension is drawn along the direction of the market trend, since the market trend is upwards - the Fibonacci extension is drawn upward.

These Fibonacci extension levels are shown as horizontal lines above the trading indicator, showing profit booking zones. In the example shown below if you had used of 100 % Fib extension you would have made nice profit from the buy trade.

NB: This is the same trade from the previous example where we used Fib retracement to buy at around retracement level 38.2 % Fib retracement level. At the same time we have used Fibonacci expansion level 100 % to set take profit level. Now find a Bitcoin price chart & practice these strategies.

How to Draw Fibonacci Expansion on Upward Bitcoin Trend

Fibo Extension Levels Drawn on an Upward Bitcoin Price Trend

From the examples put on display above, the upwards trend continued & both Fibonacci Expansion 61.8 % & 100.0 % levels were all hit after which the price retraced again after hitting the 100.0 percentage Fib extension level.

Drawing Fib Expansion Areas on a Downwards Bitcoin Price Trend

Since we use this Fibonacci Expansion tool to estimate/gauge take profits levels, how do we draw it in a downwards Bitcoin price trend?

We plot Fib extension levels technical indicator from point 1 to 2 to three as illustrated below. Remember we always plot this Fibonacci Expansion tool in the market direction of the market trend. In the example laid-out below, can you figure out what direction we've drawn it? That is right - downwards because the trend is downwards.

Try and see the difference between how we have drawn it above and how it's drawn below. This time you'd also have used Fib extension level 100%, see just where the market price reached. That would have been a nice take profit order level.

How to Draw Fibo Extension Levels on Downward Bitcoin Trend

Fibo Extension Levels Drawn on a Downward Bitcoin Price Trend

From the example put on display above, after drawing this Fibonacci expansion tool there are 2 levels that are used to show and illustrate the taking profit zones, these 2 levels are plotted as horizontal lines across the Bitcoin price chart (these levels are 61.8 % Fibonacci expansion level and 100 % Fib extension level as shown above).

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