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