How to Draw Fibonacci Extension on Down Bitcoin Trend
How Do I Draw Fibonacci Extension for Bitcoin Downtrend?
We draw the Fibonacci Extension indicator from chart point 1 to chart point 2 to chart point 3 as shown on the cryptocurrency trading example illustrated below. Remember we always plot this Fibonacci Extension tool in direction of the cryptocurrency trend. In the Fibonacci Extension example illustrated below, can you figure what's the direction which we have drawn it? That's right - downwards direction.
As a trader you would also have used Fibonacci Extension level 100.0%, just where the bitcoin price reached as illustrated on the Fibonacci Extension example illustrated below. That would have been a good take profit area.
How to Draw Fibo Extension on Down Crypto Trend
From the Fibo Extension tool examples above, after plotting this Fibonacci Extension indicator tool there are two levels that are used to show the profit taking levels, these two Fibo Extension levels are plotted as horizontal lines across the cryptocurrency chart marked as 61.8% Bitcoin Fib Extension Level & 100% Fib Extension Level.
Explanation of How to Draw Fib Extension Levels on Crypto Charts
We use Fibo Extension Zones to estimate where the bitcoin trend movement will reach. There are 2 oftenly used Fibo Extension areas: 61.8% Fibonacci Extension Level and 100% Fibonacci Extension Levels, these are used for setting taking profit levels.
To draw Fibo Extension levels on the cryptocurrency chart 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 chart point 3. Fibonacci Extension Indicator tool is drawn using three chart points as shown on the cryptocurrency trading example illustrated below of how to draw the Fibo Extension Technical Indicator Tool.
The Fibonacci Extension example illustrated below shows the 3 Chart Points where the Fibonacci Extension technical indicator is plotted, marked as Chart point 1, Chart point 2 & Chart point 3.
Chart point 1 is where the bitcoin trend started, Chart point 2 is where the bitcoin trend pulled back & retraced & Chart point 3 is where the cryptocurrency retracement reached as shown on the Fibonacci Extension Technical Indicator Tool example illustrated below.
How to Draw Fibo Extension Crypto Technical Indicator Tool on Downwards Crypto Trend
Please note where these Fibonacci Extension areas are plotted - Fibo Extension levels are plotted above the Fibonacci indicator, these are the chart points where a trader will place the takeprofit orders using these Fibo Extension Levels - 61.8% Fibonacci Extension Level and 100.0% Fib Extension Level.
