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