What's Difference between Commodity Trading Fib Retracement & Commodity Trading Fibonacci Extension?

How to use Commodity Trading Fib Retracement & Extension and the Difference between Commodity Trading Fib Retracement & Extension

Commodity Trading Fib Retracement Areas

Fib retracement is drawn between 2 chart points but Fib extension is plotted using Three chart points.

Commodity Trading Fib Retracement Level example illustrated and shown below where the commodity trend is moving downwards between Chart point 1 and Chart point 2, then after the Chart point 2 the commodity price retraces then it continues heading upwards in the original upward trend. Note that this Commodity Trading Fib Retracement Levels indicator is drawn from Chart point 1 to Chart point 2 in direction of the market trend.

Commodity Trading Fib Retracement Levels - How to Draw Commodity Fibo Retracement Levels

Commodity Trading Fib Extension Levels

Fibonacci retracement is drawn between 2 chart points but Fib extension is plotted using Three chart points.

To draw these Commodity Trading Fib Extension levels we wait until the commodity price retracement is complete & the price starts to move in the original direction of the Commodity Trading trend. Where the retracement reaches is used as chart point 3 for Fibo extension.

The Commodity Trading Fib Extension example illustrated and shown below shows 3 chart Points where the Commodity Trading Fib Extension indicator is drawn, marked as chart point 1, 2 & 3. Chart point 1 is where the commodity trend started, Chart point 2 is where the commodity trend pulled back & retraced and Chart point 3 is where the retracement reached as displayed on the Commodity Trading Fib Extension example illustrated and shown below.

Commodity Trading Fib Extension Levels - How to Draw Commodity Fibo Extension Levels

Please note where these Commodity Trading Fib Extension areas are plotted - Commodity Trading Fib Extension levels are drawn above the Commodity Trading Fib Extension indicator, these are the points where one will set take profit orders.