CFD Fibonacci Extension Strategy using CFDs Fibonacci Extension Levels

Trading with CFD Fibonacci Extension Indicator

Fibo extension levels 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 retracement reaches is used as chart point 3.

The Fibonacci extension example explained and illustrated below shows the 3 Chart Points where the Fibonacci extension 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 & retraced and Chart point 3 is where the cfd retracement reached as shown on the CFD Fibonacci Extension Indicator examples explained and illustrated below.

CFD Fibonacci Extension Strategy using CFD Fibonacci Extension Zones

Please note where these CFD Fib Extension levels are plotted - CFD Fib Extension zones are plotted above the Fibo Indicator, these are points where the trader will place the take-profit orders using these CFD Fibo Extension Levels - 61.8% & 100% CFD Fibonacci Extension Levels.

Drawing CFDs Fib Extension Zones on an Upward CFDs Trend

We use Fibonacci extension levels to estimate where the market trend movement will get to. There are 2 important Fibo extension levels: 61.8% and 100% CFD Fibo Extension Levels, these are used for taking profit.

On the Fibonacci extension examples illustrated below you can see that the Fib extension technical indicator is drawn along the direction of the trend, since the trend is upwards - the Fibo extension is also drawn upward.

These Fibo extension levels are displayed as horizontal lines above the CFD Fibonacci Extension 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 trade setup.

Drawing Fibonacci Extension Zones on an Upwards CFD Trend - CFD Fibonacci Extension Strategies in CFD

From the above Fibonacci extension examples, the upward 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 Fib Extension Areas on a Downward CFD Trend

Since we use this Fibo extension indicator to estimate take profit levels, how do we draw it in a downward trend?

We draw the Fibonacci extension indicator from chart point 1 to 2 to 3 as displayed below. Remember we always plot this Fib extension tool in the direction of the trend. In the Fibo extension examples explained below, can you figureout what direction we have plotted it? That's right - downward direction.

Try & spot the difference between how we have drawn 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 take profit area.

Drawing Fibonacci Extension Areas on a Downwards CFD Trend - CFD Fibonacci Extension Strategies in CFD

From the Fibonacci extension example above, after drawing this Fibonacci extension tool there are two levels that are used to show the profit-taking areas, these two Fibonacci extension levels are drawn as horizontal lines across the cfd price chart.