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