How Do You Draw CFD Fibonacci Extension Levels?
How Do You Trade and Draw CFD Fibonacci Extension Levels?
Traders use Fibonacci extension levels to estimate where the trend movement will reach. There are two commonly used Fibonacci extension levels - 61.8% CFD Fibonacci Extension Level and 100% CFD Fibonacci Extension Levels, these fibonacci extension levels are used for setting cfd trading take profit areas.
To draw CFD Fibonacci Extension levels on the cfd chart we wait until the cfd price retracement is complete & the price starts to move in original direction of the trend. Where the cfd price retracement reaches is used as chart point 3. Fibonacci Extension CFD Indicator is drawn using three chart points as illustrated on the Fibonacci extension cfds trading example explained below of how to draw the Fibonacci Extension CFD Technical CFD Indicator.
The Fibonacci extension example explained and illustrated below shows the 3 CFD Chart Points where the Fibo extension indicator is drawn, marked as CFD Trading Chart point 1, CFD Trading Chart point 2 & CFD Trading Chart point 3.
CFD Trading Chart point 1 is where the cfd trend started, CFD Chart point 2 is where the cfd trend pulled back & retraced & CFD Trading Chart point 3 is where the cfd retracement reached as shown on the Fibonacci Extension CFD Indicator examples explained and illustrated below.
How Do You Draw CFD Fibonacci Extension Levels? - How Do You Draw CFD Fibonacci Extension Levels?
Please note where these CFD Fib Extension levels are plotted - CFD Fib Extension zones are plotted above the Fibo cfd technical indicator, these are the chart points where one will set the cfd take profit orders using these CFD Fibonacci Extension Levels - 61.80% and 100.00% CFD Fibonacci Extension Levels.
Drawing Fibonacci Extension Zones on an Upwards CFD Trading Trend
We use Fibonacci expansion areas to estimate where the market trend movement will get to. There are two commonly used Fibonacci extension levels: 61.8%CFD Fibonacci Extension Level & 100% CFD Fib Extension Level, these CFD Fib Extension Levels are used for taking profit.
On the Fibonacci extension indicator example explained and illustrated below you can see that the Fibonacci extension technical indicator is drawn along the direction of the trend, since the trend is upwards - the Fibonacci extension levels indicator is drawn upwards.
These Fibo extension levels are displayed as horizontal lines above the CFD Fibonacci Extension indicator, showing cfd profit taking areas. In the cfds trading example illustrated below if you had used the 100.0% Fibonacci extension level you would have made nice profit from the trade setup.
Drawing Fibonacci Extension Levels Indicator on an Upward CFD Trading Trend
From the above Fibonacci extension indicator examples, the upwards trend continued & both 61.80% and 100.0% Fibonacci extension levels were all hit after which cfd price retraced again after getting to the 100.0% CFD Fibonacci Extension level.
Drawing CFDs Fib Extension Areas on a Downward CFDs Trading Trend
Since we use the Fibonacci extension indicator tool to estimate cfd trading take profit levels, how do we draw Fibonacci Extension in a downward CFD trend?
We draw the Fibonacci extension indicator tool from chart point 1 to chart point 2 to chart point 3 as illustrated on the Fibonacci extension cfds trading example illustrated below. Remember we always plot this Fibonacci extension tool in the direction of the trend. In the Fibonacci extension example explained and illustrated below, can you figure what is direction that we have drawn it? That is right - downward direction.
Try & spot the difference between how we have drawn Fibonacci extension levels indicator above and how CFD Fibonacci Extension levels indicator is drawn below. This time you would also have used Fibonacci extension level 100.0%, just where the price reached as shown on the Fibonacci extension levels cfds trading example explained and illustrated below. This would have been a good cfd take profit area.
Drawing Fibonacci Extension Levels Indicator on a Downward CFD Trading Trend
From the Fibonacci extension levels indicator example above, after drawing this Fibonacci extension levels cfd tool there are 2 levels that are used to show the cfd trading profit taking areas - these two Fibonacci extension levels are drawn as horizontal lines across the cfd price chart marked as 61.80% CFDs Fib Extension Level & 100% CFD Fib Extension Level.
How Do You Draw CFD Fibonacci Extension Levels?
