How Do You Draw Fib Expansion Indicator on Forex Charts?

How Do You Draw Fibonacci Expansion Trading Indicator on Forex Charts?

How Do You Draw Fib Expansion Levels on Forex Charts?

Forex traders use Fib Expansion levels indicator to estimate where the trend movement will reach. There are 2 important Fib Expansion areas: 61.8% and 100% Fib Expansion Areas, these are used for taking profit.

To draw Fib Expansion levels on the forex chart we wait until the forex price retracement is complete & the price starts to move in original direction of the Forex trend. Where the forex price retracement reaches is used as chart point 3. Fib Expansion Technical Indicator is drawn using three chart points as shown on the forex trading example below of how to draw the Fib Expansion Technical Indicator Tool.

The Fib Expansion forex trading example below shows the 3 Forex Chart Points where the Fib Expansion technical indicator is drawn, marked as Forex Chart point 1, Forex Chart point 2 and Forex Chart point 3.

Forex Chart point 1 is where the forex trend started, Forex Chart point 2 is where the forex trend pulled back & retraced and Forex Chart point 3 is where the price retracement reached as shown on the Fib Expansion Indicator Tool forex trading example below.

How Do You Trade with Fib Expansion?

Please note where these Fib Expansion zones are drawn - Fib Expansion zones are plotted above the Fibonacci forex indicator, these are the chart points where one will set forex take profit orders using these Fib Expansion Levels - 61.8% and 100.0% Fib Expansion Areas.

Drawing Fib Expansion Levels on an Upwards Forex Trend

We use Fib Expansion levels to estimate where the trend movement will reach. There are 2 important Fib Expansion areas: 61.8% Fib Expansion Level and 100% Fib Expansion Level, these Fib Expansion Levels are used as forex taking profit levels.

On the Fib Expansion indicator forex trading example below you can see that the Fib Expansion technical indicator tool is drawn along the direction of the trend, since the trend is upward - the Fib Expansion indicator is drawn upwards.

These Fib Expansion areas are displayed as horizontal lines above the Fib Expansion indicator, showing the profit taking areas. In the forex trading example below if you had used of 100.0% Fib Expansion level you would have made nice profit from the forex trade setup.

Drawing Fib Expansion Indicator on an Upward Forex Trend - Fib Expansion Trading Tool

From the above Fib Expansion indicator forex trading example, the upward trend continued and both 61.8% & 100.00% Fib Expansion levels were all hit after which forex price retraced again after getting to the 100.00% Fib Expansion level.

Drawing Fib Expansion Levels on a Downwards Forex Trend

Since we use the Fib Expansion indicator tool to estimate forex take profit levels, how do we draw Fib Expansion in a downward Forex trend?

We draw the Fib Expansion tool from chart point 1 to chart point 2 to chart point 3 as illustrated on the forex trading example below. Remember we always plot this Fib Expansion tool in direction of the trend. In the Fib Expansion forex trading example below, can you figure what is direction that we have drawn it? That is right - downwards direction.

Try and spot the difference between how we have drawn Fib Expansion indicator above and how Fib Expansion indicator is drawn below. This time you would also have used Fib Expansion level 100.0%, just where the price reached as illustrated on the forex trading example below. That would have been a good forex take profit area.

Drawing Fib Expansion Indicator on a Downward Forex Trend - Fib Expansion Trading Tool

From the Fib Expansion indicator forex trading example above, after drawing this Fib Expansion forex trading tool there are 2 levels which are used to show the forex profit taking levels, these two Fib Expansion zones are drawn as horizontal lines across the forex chart marked as 61.8% Fib Expansion Level and 100% Fib Expansion Level.

How Do You Draw Fib Expansion Indicator on Forex Charts?