How Do You Draw Forex Fibonacci Expansion Levels?
How Do You Draw Forex Fibonacci Expansion Levels?
Traders use Fib expansion levels to estimate where the trend movement will get to. There are two commonly used Fib expansion levels - 61.8% Fibonacci Expansion Level and 100 % Fibonacci Expansions, these fibonacci expansion levels are used for setting forex take profit levels.
To draw Fibo Expansion levels on the chart we wait until the price retracement is complete and price begins heading in original direction of market trend. Where the price pull back gets-to is used as point 3. Fibonacci Expansion Indicator is plotted using three chart points as illustrated on the Fib expansion example below of how to plot the Fib Expansion Tool.
The Fibonacci expansion example below shows the 3 Chart Points where the Fib expansion technical indicator is drawn, marked as Chart point 1, Chart point 2 and Chart point 3.
Chart point 1 is where trend started, Chart point 2 is where trend pulled back & retraced and Chart point 3 is where the retracement reached as highlighted on the Fib Expansion Forex Tool example below.
How Do I Draw Forex Fibonacci Expansion Levels?
Please note where these Fib Expansion zones are plotted - Fibonacci Expansion areas are drawn above the Fibonacci indicator, these are the chart levels where one will set forex takeprofit orders using these Fib Expansions - 61.8% & 100.0% Fib Expansion Levels.
Drawing Fib Expansions on an Upward Trend
We use Fib expansion levels to estimate where the market trend movement will get to. There are two commonly used Fib expansion levels: 61.8% Fib Expansion Level & 100% Fibo Expansion Level, these Fibonacci Expansions are used for taking profit.
On the Fibonacci expansion indicator example below you can see that the Fibonacci expansion indicator tool is plotted along the direction of the trend, since the trend is upward - the Fibonacci expansion levels indicator is drawn upward.
These Fibo expansion levels are displayed as horizontal lines above Fibonacci Expansion indicator, showing forex profit taking zones. In the trading example below if you had used of 100.0% Fibonacci expansion level you would have made nice profit from the trade set-up.
Drawing Fibonacci Expansion Zones Indicator in an Upwards Trend
From the above Fibonacci expansion indicator example, upwards trend continued and both 61.8% & 100.0% Fibonacci expansion levels were all hit after which forex price retraced again after getting to the 100.00 % Fibonacci Expansion level.
Drawing Fib Expansion Areas on a Downwards Trend
Since we use the Fibonacci expansion indicator tool to estimate forex takeprofit zones, how do we draw Fib Expansion in a downward trend?
We draw the Fibonacci expansion indicator tool from chart point 1 to chart point 2 to chart point 3 as illustrated on the Fibonacci expansion example below. Remember we always draw this Fibo expansion tool in direction of the market trend. In the Fib expansion example below, can you figure what is direction that we have drawn it? That is right - downward direction.
Try and identify the difference between how we have drawn Fibonacci expansion levels indicator above and how Fibonacci Expansion levels indicator is drawn below. This time you would also have used Fib expansion area 100.0%, just where price reached as shown on the Fibonacci expansion levels forex example below. This would have been a good take profit zone.
Drawing Fib Expansion Zones Technical Indicator in a Downward Trend
From the Fibonacci expansion levels indicator example above, after plotting this Fibonacci expansion levels forex tool there are 2 levels which are used to show the profit taking areas - these two Fibonacci expansion levels are drawn as horizontal lines across the price chart marked as 61.8% Forex Fibonacci Expansion Level & 100% Fibo Expansion Level.
How Do I Draw Forex Fibonacci Expansion Levels?
