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