How to Draw Fibonacci Expansion on Downward Trend
Drawing Fibonacci Expansion Levels on a Downward Trend
We draw the Fibo Expansion indicator tool from chart point 1 to chart point 2 to chart point 3 as displayed on the examples shown below. Remember we always plot this Fibo Expansion tool in the direction of the trend. In the Fib Expansion example illustrated below, can you figure what direction we have plotted it? That's right - downwards direction.
As a trader you would also have used Fibo Expansion area 100.0 %, just where the price reached as illustrated on the Fibonacci Expansion example illustrated below. That would have been a nice takeprofit area.
How Do I Draw Fib Expansion on Downward Trend - How Do I Draw Fibo Expansion on Down Trend
From the Fib Expansion tool example above, after drawing this Fibo Expansion tool there are two levels that are used to show the profit taking levels, these two Fibo Expansion zones are drawn as horizontal lines across the chart marked as 61.8%Fib Expansion Level and 100% Fibonacci Expansion Level.
Explanation of How to Draw Fibo Extension Levels on Charts
We use Fib Expansion levels to try to estimate where trend move will reach. There are two commonly used Fibo Expansion areas: 61.8% Fibonacci Expansion Level and 100% Fib Expansion Areas, these are used for setting taking profit areas.
To draw Fibonacci Expansion levels on the chart we wait til the price retracement is complete and the price starts to head in original direction of trend. Where the price retracement reaches is used as point 3. Fib Expansion tool is drawn using three chart points as shown on the examples displayed below of how to draw the Fibo Expansion Technical IndicatorTool.
The Fibo Expansion example shown below shows the 3 Chart Points where the Fibo Expansion technical indicator is plotted, labeled as Chart point 1, Chart point 2 & Chart point 3.
Point 1 is where the market trend started, Point 2 is where the trend pulled back ##1and retraced ##1& Chart point 3 is where the retracement reached as highlighted on the Fibonacci Expansion Indicator Tool example illustrated below.
How Do I Draw Fibo Expansion Tool on Downward Trend
Please note where these Fibo Expansion areas are plotted - Fibonacci Expansion areas are plotted above the Fibo indicator, these are the chart points where a trader will set the take-profit orders using these Fibonacci Expansion Levels - 61.8 % Fib Expansion Level & 100.0% Fib Expansion Level.
