What's Difference between FX Fibo Retracement and Forex Fibonacci Extension?
How to use Fibo Retracement and Extension - Fibonacci Retracement vs Extension
Forex Trading Fib Retracement Areas
Fibo retracement is drawn between 2 chart points but Fibonacci extensionis drawn using 3 chart points.
Fibonacci Retracement Level example below where the forex trend is moving downwards between Chart point 1 and Chart point 2, then after Chart point 2 the forex price retraces then it continues heading upwards in original upward trend. Note that this Fibonacci Retracement Levels indicator is drawn from Chart point 1 to Chart point 2 in the direction of the market trend.
Fibonacci Retracement Levels - How to Draw Fibo Retracement Zones
Fibonacci Extension Levels
Fibo retracement is drawn between 2 chart points but Fibonacci extensionis drawn using 3 chart points.
To draw these Fibo Extension zones we wait until the price retracement is complete & the price starts to move in original direction of the Forex trend. Where the retracement reaches is used as chart point Three for Fibonacci extension.
The Fibonacci Extension example below shows the 3 chart Points where the Fibonacci Extension indicator is drawn, marked as chart point 1, 2 & 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 retracement reached as illustrated & shown on the Fibonacci Extension example below.
Fibonacci Extension Levels - How to Draw Fibo Extension Zones
Please note where these Fibonacci Extension levels are plotted - Fibonacci Extension zones are plotted above the Fibo Extension indicator, these are the points where a trader will place the takeprofit orders.
