How to Draw Oil Trading Fib Extension on Downward Oil Trading Trend
How Do You Draw Oil Fibonacci Extension for Oil Trading Downtrend?
We draw the Oil Trading Fibo Extension indicator from chart point 1 to chart point 2 to chart point 3 as shown and illustrated on crude oil trading example explained below. Remember we always plot this Oil Fib Extension tool in the direction of the oil trend. In the Oil Fib Extension example explained below, can you figure what direction we have plotted it? That's right - downward direction.
As a trader you would also have used Oil Fib Extension level 100.0%, just where the crude oil price reached as illustrated on the Oil Fib Extension example explained below. That would have been a good take profit area.
How to Draw Oil Trading Fib Extension on Downward Oil Trading Trend
From the Oil Trading Fib Extension indicator tool example above, after drawing this Oil Fib Extension indicator tool there are 2 levels that are used to show the profit taking levels, these two Oil Trading Fibo Extension levels are plotted represented as horizontal lines across the oil chart marked as 61.8% Oil Trading Fibo Extension Level and 100% Oil Fib Extension Level.
Explanation of How to Draw Crude Oil Fib Extension Levels on Crude Oil Trading Charts
We use Oil Fib Extension Zones to estimate where the oil trend movement will reach. There are 2 oftenly used Oil Trading Fib Extension areas: 61.8% Oil Trading Fib Extension Level and 100% Oil Fib Extension Levels, these are used for setting taking profit levels.
To draw Oil Trading Fib Extension levels on the oil chart 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 crude oil price retracement reaches is used as chart point 3. Oil Fibo Extension Technical Indicator tool is drawn using three chart points as shown on the crude oil trading example explained below of how to draw the Oil Fib Extension Tool.
The Oil Fib Extension example explained below shows the 3 Chart Points where the Oil Trading Fibo Extension indicator is plotted, 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 and retraced & Chart point 3 is where the oil retracement reached as displayed on the Oil Fib Extension Technical Indicator Tool example explained below.
How to Draw Oil Fib Extension Tool on Downwards Oil Trading Trend
Please note where these Oil 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% Oil Trading Fib Extension Level and 100.0% Oil Fib Extension Level.
