How to Analyze Fibonacci Extension Levels in XAUUSD

Read Fibonacci Extension Levels in XAUUSD

Fibonacci extension levels gold technical indicator is drawn using 3 chart points.

To draw Fibo Extension levels we wait until the gold price retracement is complete & the price starts to move in original direction of the XAUUSD trend. Where the gold price retracement reaches is used as chart point 3.

The Fibonacci extension xauusd example shown below shows the 3 Gold Chart Points where the Fibonacci extension gold technical indicator is drawn, marked as Gold Chart point 1, 2 and 3. Gold Chart point 1 is where the xauusd trend started, Gold Chart point 2 is where the xauusd trend pulled back and retraced and Gold Chart point 3 is where the price retracement reached as shown on the Fibonacci Extension Indicator gold trading example shown below.

XAUUSD Trade with Fibonacci Extension?

Please note where these Fibonacci Extension levels are plotted - Fibonacci Extension zones are drawn above the Fibonacci Gold Technical Indicator, these are points where the trader will set the xauusd take-profit orders using these Fibonacci Extension Levels - 61.80% and 100% Fibo Extension Levels.

Drawing Fib Extension Zones on an Upward XAUUSD Trend

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

On the Fibonacci extension xauusd example shown below you can see that the Fibonacci extension technical indicator is drawn along the direction of the trend, since the trend is upward - the Fibonacci extension indicator is also drawn upwards.

These Fibo extension levels are displayed as horizontal lines above Fibonacci Extension gold technical technical indicator, showing profit taking areas. In the xauusd example shown below if you had used of 100% Fibonacci extension you would have made nice profit from the xauusd trade setup.

Drawing Fibo Extension Zones on an Upward XAUUSD Trend - Fib Extension Strategies in XAUUSD

From the above Fibonacci extension xauusd examples, the upward trend continued and both 61.8% & 100.00% Fibonacci extension levels were all hit after which gold price retraced again after getting to the 100.0 % Fibonacci Extension level.

Drawing Fib Extension Areas on a Downward XAUUSD Trend

Since we use this Fibonacci extension indicator tool to estimate xauusd 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 shown below. Remember we always plot this Fibonacci extension tool in the direction of the trend. In the Fibonacci extension xauusd example shown below, can you figure what direction we have drawn it? That is right - downwards direction on the gold chart.

Try & spot difference between how we have drawn the Fibo extension above & how Fibonacci Extension is drawn below. This time you would also have used Fibonacci extension level 100%, just where the price reached as illustrated on the xauusd example shown below. That would have been a nice xauusd take profit area.

Drawing Fibo Extension Areas on a Downward XAUUSD Trend - Fib Extension Strategies in XAUUSD

From the Fibonacci extension xauusd example above, after drawing this Fibonacci extension tool there are 2 levels that are used to show the xauusd profit taking areas, these two Fibonacci extension levels are drawn as horizontal lines across the gold price chart.

How Do I Analyze Fibonacci Extension Levels in XAUUSD