Fibo Extension Strategy using Fibonacci Expansion Levels
Fib expansion is drawn using 3 chart points.
To draw Fibo Expansion areas we wait until the bitcoin price retracement is complete and the bitcoin price starts and begins to move in the original direction of the Bitcoin trend. Where the retracement gets to is used as the point 3.
The Fibonacci expansion exemplification illustrated below shows the three Chart Points where the Fibonacci extension indicator is drawn, labeled as Chart point 1, 2 & 3. Point 1 is where the btcusd crypto trend started, Point 2 is where the btcusd crypto trend pulled back and retraced and Chart point 3 is where the price retracement reached such as shown & displayed on the Fibonacci Expansion Tool example illustrated below.
Fibonacci Expansion Strategy using Fibonacci Expansion Areas
Please note where these Fibonacci Extension levels are drawn - Fibo Extension levels are drawn above the Fibo Technical Indicator, these are points where the trader will set the takeprofit orders using these Fibonacci Expansion Levels - 61.80% & 100% Fibonacci Expansion Areas.
Drawing Fib Expansions on an Upward BTCUSD Trend
We use Fibo expansion areas to try to project where bitcoin trend movement will get to. There are Two important Fib expansion areas: 61.8% & 100% Fib Expansion Areas, these are used for taking and booking profit.
On the Fibonacci expansion exemplification illustrated and shown below you as a trader can see that the Fibonacci expansion indicator is plotted along the direction of the btcusd crypto trend, since the bitcoin trend is upward - the Fib extension is drawn upward.
These Fibonacci extension levels are shown as horizontal lines above the Fibonacci Expansion indicator, showing profit taking and booking areas. In the example illustrated below if you had used of 100% Fibonacci expansion you would have made nice profit from the trade set-up.
Drawing Fibonacci Expansion Levels on an Upward Bitcoin Trend - Fib Expansion Strategies in Bitcoin Trading
From the above Fib extension examples, the upward bitcoin trend continued & both 61.80% & 100.0% Fibonacci expansion levels were all hit after which bitcoin price retraced again after hitting the 100.0 % Fibo Expansion area.
Drawing Fibonacci Expansion Areas on a Downward Bitcoin Trend
Since we use this Fibonacci expansion tool to estimate/gauge takeprofit areas, how do we draw it in a downward trend?
We draw the Fibonacci expansion indicator from chart point 1 to 2 to Three just as is shown below. Remember we always draw this Fibonacci expansion tool in direction of the trend. In the Fibonacci expansion exemplification shown below, can you figure what direction we've plotted it? That is right - downwards direction.
Try and identify the difference between how we have plotted Fibonacci expansion above and how Fibonacci Expansion is drawn below. This time you'd also have used Fib expansion level 100 %, just where the bitcoin crypto price reached such as illustrated and shown on the example shown below. That would have been a nice tp order area.
Fibo Expansion Strategies in Crypto Trading
From Fib extension examples above, after drawing this Fibonacci expansion tool there are 2 levels that are used to show and display the profit taking and booking areas, these 2 Fib expansion levels are drawn as horizontal lines across the bitcoin price chart.
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