How Do You Draw Fibonacci Extension Levels on Downward Forex Trend?
How Do You Draw Fibonacci Extension Levels on Downward Forex Trend?
We draw the Fibo Extension indicator tool from chart point 1 to chart point 2 to chart point 3 as displayed on the Fibonacci extension forex example below. Remember we always plot this Fibonacci Extension tool in the direction of the trend. In the Fibonacci Extension example below, can you figure what is direction that we have drawn it? That is right - downwards direction.
As a trader you would also have used Fibo Extension level 100.0%, just where the price reached as illustrated on the Fibonacci Extension example below. That would have been a good forex take profit area.
How Do You Draw Fibonacci Extension Levels on Downward Forex Trend?
From the Fibonacci Extension tool example above, after drawing this Fibonacci Extension indicator tool there are 2 levels that are used to show the forex profit taking levels - these two Fibonacci Extension levels are represented as horizontal lines across the forex chart marked as 61.8% Forex Fibo Extension Level and 100% Fibonacci Extension Level.
Interpretation of How Do You Draw Fibonacci Extension Levels on Forex Charts?
Forex traders Fibonacci Extension levels to estimate where the price movement will reach. There are 2 commonly used Fibo Extension areas: 61.80% Fibonacci Extension Level and 100% Fibonacci Extension Levels - these fibonacci extension levels are used for setting forex taking profit levels.
To draw Fibonacci Extension 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. Fibonacci Extension Indicator is drawn using 3 chart points as illustrated on the Fibonacci extension forex example below of how to draw the Fibonacci Extension Technical Indicator.
The Fibonacci Extension example below shows the 3 Forex Chart Points where the Fibo Extension 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 price pulled back & retraced & Forex Chart point 3 is where the forex retracement reached as displayed on the Fibonacci Extension Indicator example below.
How Do You Draw Fibonacci Extension Levels on Downward Forex Trend?
Please note where these Fibo Extension levels are plotted - Fibonacci Extension zones are plotted above the Fibo forex indicator, these are the chart points where one will set forex take profit orders using these Fibonacci Extension Levels - 61.8% Fibonacci Extension Level and 100.0% Fibonacci Extension Level.
How Do You Draw Fibonacci Extension Levels on Downward Forex Trend?
