How Do You Draw Forex Trading Fib Expansion Levels?
How Do You Draw Forex Trading Fib Expansion Levels?
Forex traders use Fibonacci expansion levels to estimate where the trend movement will reach. There are two commonly used Fibonacci expansion levels - 61.8% Fibonacci Expansion Level and 100% Fibonacci Expansion Levels, these fibonacci expansion levels are used for setting forex take profit levels.
To draw Fibo 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 trend. Where the forex price retracement reaches is used as chart point 3. Fibonacci Expansion Forex Indicator is plotted using three chart points as illustrated on the Fib expansion forex trading example below of how to plot the Fibonacci Expansion Tool.
The Fibonacci expansion example below shows the 3 Forex Chart Points where the Fibonacci expansion forex 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 & Forex Chart point 3 is where the forex retracement reached as displayed on the Fibonacci Expansion Forex Tool example below.
How Do You Draw Forex Trading Fib Expansion Levels?
Please note where these Fibonacci Expansion zones are plotted - Fibonacci Expansion zones are plotted above the Fibonacci forex indicator, these are the chart points where one will set forex take profit orders using these Fibonacci Expansion Levels - 61.8% & 100.0% Fibo Expansion Levels.
Drawing Fibonacci Expansion Levels on an Upward Forex Trend
We use Fibo expansion levels to estimate where the market trend movement will get to. There are two commonly used Fibonacci expansion levels: 61.8% Forex Fibo Expansion Level & 100% Fibo Expansion Level, these Fibonacci Expansion Levels are used for taking profit.
On the Fibonacci expansion indicator example below you can see that the Fibonacci expansion technical indicator tool is plotted along the direction of the trend, since the trend is upwards - 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 areas. In the forex 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 Technical Indicator on an Upward Forex Trend
From the above Fibonacci expansion indicator example, upward 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 Fibonacci Expansion Areas on a Downwards Forex Trend
Since we use the Fibonacci expansion indicator tool to estimate forex take profit levels, how do we draw Fibonacci Expansion in a downward Forex 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 forex trading example below. Remember we always draw this Fibo expansion tool in direction of the market trend. In the Fibonacci expansion example below, can you figure what is direction that we have drawn it? That is right - downwards 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 Fibonacci expansion level 100.0%, just where the price reached as shown on the Fibonacci expansion levels forex trading example below. This would have been a good forex take profit area.
Drawing Fibonacci Expansion Zones Technical Indicator on a Downward Forex Trend
From the Fibonacci expansion levels indicator example above, after plotting this Fibonacci expansion levels forex trading tool there are 2 levels which are used to show the forex profit taking areas - these two Fibonacci expansion levels are drawn as horizontal lines across the forex price chart marked as 61.8% Forex Trading Fib Expansion Level & 100% Fibo Expansion Level.
How Do You Draw Forex Trading Fib Expansion Levels?
