How to Draw Fibonacci Extension on DownTrend - Fibonacci Extension Indicator on Downwards Forex Trend
Drawing Fibonacci Extension Levels on a Downwards 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 example below. Remember we always draw this Fibonacci Extension tool in 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 Fibonacci Extension level 100.00%, just where the price reached as illustrated on the Fibonacci Extension example below. That would have been a good take profit area.
How to Draw Fib Extension on Downward Forex Trend - How to Draw Fibonacci Extension on Down Forex Trend
From the Fibo Extension indicator tool examples above, after plotting this Fibonacci Extension indicator tool there are 2 levels that are used to show the profit taking levels, these two Fibonacci Extension levels are plotted as horizontal lines across the forex chart marked as 61.8% Forex Trading Fib Extension Level & 100% Fibo Extension Level.
Explanation of How to Draw Fibonacci Extension Levels on Forex Charts
We use Fibonacci Extension levels to estimate where the trend movement will reach. There are 2 commonly used Fibonacci Extension levels: 61.80% Fibonacci Extension Level and 100% Fibonacci Extension Levels, these are used for setting taking profit levels.
To draw Fibo Extension 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 forex price retracement reaches is used as chart point 3. Fibonacci Extension Indicator tool is drawn using three chart points as shown on example below of how to plot the Fibonacci Extension Technical Indicator Tool.
The Fibonacci Extension example below shows the 3 Chart Points where the Fibo Extension technical indicator is drawn, 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 & retraced and Chart point 3 is where the forex retracement reached as displayed on the Fibonacci Extension Technical Indicator Tool example below.
How to Draw Fibonacci Extension Indicator on Downwards Forex Trend
Please note where these Fibo Extension areas are drawn - Fibo Extension zones are plotted above the Fibo indicator, these are chart points where one will set take-profit orders using these Fibo Extension Levels - 61.8% Fibonacci Extension Level and 100.0% Fibonacci Extension Level.
