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