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Fibonacci Retracement vs Extension in Crypto Trading

Use Fibonacci retracement and extension tools and their differences

BTCUSD Fibonacci Retracement Areas

Draw Fib retracement between two points: use three for Fib extensions.

Fib Retracement Level example illustrated below where the bitcoin trend is moving downward between Chart point 1 & Chart point 2, then after the Point 2 the bitcoin cryptocurrency price retraces then it continues moving upwards in the original upward trend. Note that this Fibonacci Retracement Levels indicator is drawn from Chart point 1 to point 2 in direction of the market trend.

Fibonacci Retracement vs Expansion Levels Explained

Fibo Retracement Levels - How to Draw Fib Retracement Levels

Fibonacci Expansion Levels

Fibonacci retracement links two points on a chart, while expansion uses three points.

To mark these Fibonacci Extension levels, we wait until the bitcoin price fall is done, and the bitcoin price starts to move as it did before. Where the price fall ends is used as point 3 for Fib extension on the chart.

The picture below shows how the Fibonacci Expansion works, with the three points on the chart where the Fibonacci Expansion indicator is drawn, which are called chart point 1, 2, and 3. Point 1 is where the bitcoin trend started, Point 2 is where the bitcoin crypto trend went back a bit, and Chart point 3 is where the price went back to, as you can see in the Fibo Extension example below.

Fibonacci Extensions Difference from Retracement Levels in Fibonacci Tools

Fibo Expansion Levels - How to Draw Fibo Expansion Levels

Take note of the placement of these Fibonacci Expansion levels - they are drawn above the core Fibo Extension indicator figures, marking the precise locations where a bitcoin trader should place their take-profit orders.

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