How Do I Interpret Oil Fibo Extension Levels in Oil Trading?
How Do I Trade Oil Fibo Extension Levels in Oil Trading?
Fibonacci extension levels oil technical indicator is drawn using 3 oil chart points.
To draw Oil Trading Fib Extension zones we wait until the crude oil price retracement is complete & the crude oil price starts to move in the original direction of the Oil Trading trend. Where the crude oil price retracement reaches is used as oil chart point 3.
The Fibonacci extension crude oil trading example explained below shows the 3 Oil Chart Points where the Fibonacci extension oil technical indicator is drawn, marked as Oil Trade Chart point 1, 2 and 3. Oil Trading Chart point 1 is where the oil trend started, Oil Trading Chart point 2 is where the oil trend pulled back and retraced & Oil Trading Chart point 3 is where the crude oil price retracement reached as illustrated on the Oil Trading Fibo Extension Technical Indicator crude oil trading example explained below.
Oil Trading Fib Extension Strategy using Oil Trading Fib Extension Levels
Please note where these Oil Trading Fib Extension levels are plotted - Oil Trading Fib Extension levels are plotted above Fibo Oil Trading Indicator, these are points where the trader will set the oil take profit orders using these Oil Trading Fib Extension Levels - 61.8% & 100% Oil Fibonacci Extension Levels.
Drawing Crude Oil Fibo Extension Levels on an Upward Crude Oil Trading Trend
We use Fibonacci extension levels to estimate where the oil trend movement will reach. There are Two important Fibo extension levels: 61.8% and 100% Oil Trading Fibo Extension Levels, these are used for profit taking.
On the Fibonacci extension crude oil trading example explained below you can see that the Fibonacci extension oil technical indicator is drawn along the direction of the oil trend, since the oil trend is upwards - the Fibonacci extension oil indicator is also drawn upwards.
These Fibo extension levels are displayed as horizontal lines above the Oil Trading Fib Extension technical indicator, showing profit-taking areas. In the crude oil trading example explained below if you had used of 100% Fibonacci extension you would have made nice profit from the oil trade setup.
Drawing Oil Trading Fibonacci Extension Levels on an Upwards Oil Trend - Oil Trading Fib Extension Strategies in Oil Trading
From the above Fibonacci extension oil trading examples, the upward oil trend continued & both 61.80% and 100.00% Fibonacci extension levels were all hit after which crude oil price retraced again after hitting the 100.0 % Oil Trading Fibo Extension level.
Drawing Oil Fibo Extension Areas on a Downwards Oil Trading Trend
Since we use this Fibonacci extension oil indicator tool to estimate oil take profit levels, how do we draw it in a downward oil trend?
We draw the Fibonacci extension oil indicator from oil chart point 1 to 2 to 3 as shown below. Remember we always plot this Fibonacci extension tool in the direction of the crude oil trend. In the Fibonacci extension crude oil trading example explained below, can you figure what direction we have drawn it? That is right - downwards direction on the crude oil chart.
Try and spot the difference between how we have plotted the Fibo extension above & how Oil Trading Fib Extension is drawn below. This time you would also have used Fibonacci extension level 100%, just where the crude oil price reached as shown on the crude oil trading example explained below. That would have been a nice oil take profit area.
Drawing Crude Oil Trading Fibonacci Extension Areas on a Downward Crude Oil Trading Trend
From the Fibonacci extension crude oil trading example above, after drawing this Fibonacci extension tool there are 2 levels that are used to show the oil trading profit taking areas, these 2 Fibonacci extension levels are drawn as horizontal lines across the trading crude oil price chart.
How Do I Trade Oil Fibo Extension Levels in Oil Trading
