How to Draw Fibonacci Expansion - How to Draw Fib Expansion Indicator on Forex Charts

How Do You Use Fibonacci Expansion Levels on Forex Chart?

We use Fibo Expansion levels to estimate where the trend movement will reach. There are 2 important Fibonacci Expansion areas: 61.8% & 100% Fibo Expansion Areas, these are used for taking profit.

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

The Fibonacci Expansion example below shows the 3 Chart Points where the Fibonacci Expansion technical indicator is plotted, marked as Chart point 1, Chart point 2 & Chart point 3.

Chart point 1 is where the forex trend started, Chart point 2 is where the forex trend pulled back and retraced & Chart point 3 is where the forex retracement reached as displayed on the Fibonacci Expansion Indicator Tool example below.

How to Trade with Fibonacci Expansion? - How to Draw Fibonacci Expansion Levels on Forex Charts

Please note where these Fib Expansion zones are drawn - Fibonacci Expansion zones are plotted above the Fibonacci technical indicator, these are the chart points where a trader will place take profit orders using these Fibonacci Expansion Levels - 61.80% and 100.00% Fibonacci Expansion Areas.

Drawing Fibonacci Expansion Levels on an Upward Forex Trend

We use Fibonacci Expansion levels to estimate where the trend movement will reach. There are 2 important Fibonacci Expansion areas: 61.8% Forex Trading Fib Expansion Level & 100% Fibonacci 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 drawn along the direction of the trend, since the trend is upward - the Fibonacci Expansion indicator is drawn upwards.

These Fibo 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% Fibonacci Expansion level you would have made good profit from the trade setup.

Drawing Fibo Expansion Indicator on an Upward Forex Trend - Fibo Expansion Tool

From the above Fibonacci Expansion indicator example, upward trend continued and both 61.8% & 100.0% Fibonacci Expansion levels were all hit after which price retraced again after getting to the 100.00% Fibonacci Expansion level.

Drawing Fibo Expansion Levels on a Downwards Forex Trend

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

We draw the Fibonacci Expansion indicator from chart point 1 to chart point 2 to chart point 3 as shown on example below. Remember we always plot this Fibonacci Expansion tool in direction of the 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 spot the difference between how we have drawn Fibonacci Expansion indicator above and how Fibonacci Expansion indicator is drawn below. This time you would also have used Fibonacci Expansion level 100.0%, just where the price reached as illustrated on the example below. That would have been a good take profit area.

Drawing Fibo Expansion Indicator on a Downwards Forex Trend - Fibo Expansion Tool

From the Fibonacci Expansion indicator example above, after drawing this Fibonacci Expansion tool there are 2 levels that are used to show the profit-taking areas, these two Fibonacci Expansion levels are plotted as horizontal lines across the forex price chart marked as 61.8% Forex Fibo Expansion Level and 100% Fibonacci Expansion Level.