Trading Stocks Read and Draw Stocks Fibonacci Extension Levels

How Do I Draw Stocks Fibonacci Extension Levels?

Traders use Fibonacci extension levels to estimate where the trend movement will reach. There are two commonly used Fibonacci extension levels - 61.8% Stocks Fibonacci Extension Level and 100% Stocks Fibonacci Extension Levels, these fibonacci extension levels are used for setting stocks trading take profit levels.

To draw Stocks Fibonacci Extension levels on the stocks chart we wait until the stocks price retracement is complete and the price starts to move in original direction of the trend. Where the stocks price retracement reaches is used as chart point 3. Fibonacci Extension Stocks Indicator is plotted using three chart points as shown on the Fibonacci extension stock examples illustrated & described below of how to plot the Fibonacci Extension Technical Indicator.

The Fibonacci extension example illustrated and explained below shows the 3 Stocks Chart Points where the Fibonacci extension stocks indicator is drawn, marked as Stocks Trading Chart point 1, Stocks Trading Chart point 2 & Stocks Trading Chart point 3.

Stocks Chart point 1 is where the stocks trend started, Stocks Trading Chart point 2 is where the stocks trend pulled back and retraced & Stocks Chart point 3 is where the stocks retracement reached as shown on the Fibonacci Extension Stocks Indicator examples illustrated & described below.

Read and Draw Stocks Fibonacci Extension Levels? - How Do I Draw Stocks Fibonacci Extension Levels?

Please note where these Stocks Fib Extension areas are drawn - Stocks Fib Extension zones are plotted above the Fibonacci stocks technical indicator, these are chart points where a trader will place the stocks take profit orders using these Stocks Fibo Extension Levels - 61.80% & 100.00% Stocks Fibo Extension Areas.

Drawing Fibo Extension Zones on an Upward Stock Trend

We use Fibo expansion levels to estimate where the market trend movement will reach. There are two commonly used Fibonacci extension levels: 61.8%Stocks Fibo Extension Level & 100% Stocks Fib Extension Level, these Stocks Fib Extension Levels are used for taking profit.

On the Fibonacci extension indicator example illustrated and explained below you can see that the Fibonacci extension technical indicator is plotted along the direction of the trend, since the trend is upward - the Fibonacci extension levels indicator is drawn upwards.

These Fibo extension levels are displayed as horizontal lines above the stocks trading Fibonacci Extension technical indicator, showing stocks profit taking areas. In the stock examples illustrated & described below if you had used 100.0% Fibonacci extension level you would have made nice profit from the trade set-up.

Drawing Fibonacci Extension Levels Stock Indicator on an Upward Stocks Trend

From the above Fibonacci extension indicator examples, the upwards trend continued & both 61.80% & 100.0% Fibonacci extension levels were all hit after which stocks price retraced again after getting to the 100.0% Stocks Fibonacci Extension level.

Drawing Stocks Fib Extension Levels on a Downward Stocks Trend

Since we use the Fibonacci extension indicator tool to estimate stocks trading take profit levels, how do we draw Fibonacci Extension in a downward Stocks trend?

We draw the Fibonacci extension tool from chart point 1 to chart point 2 to chart point 3 as shown on the Fibonacci extension stock examples illustrated & described below. Remember we always draw this Fibonacci extension tool in direction of the trend. In the Fibonacci extension example illustrated and explained below, can you figure what direction we have drawn it? That's right - downward direction.

Try & identify the difference between how we have drawn Fibonacci extension levels indicator above and how Stocks Fibonacci Extension levels indicator is drawn below. This time you would also have used Fibonacci extension level 100.0%, just where the price reached as illustrated on the Fibonacci extension levels stock trading example illustrated and explained below. This would have been a good stocks take profit area.

Drawing Fibonacci Extension Levels Stock Indicator on a Downward Stocks Trend

From the Fibonacci extension levels indicator example above, after plotting this Fibonacci extension levels stocks tool there are two levels that are used to show the stocks trading profit taking areas - these two Fibonacci extension levels are drawn as horizontal lines across the stocks price chart marked as 61.8% Stocks Fibo Extension Level & 100% Stocks Fib Extension Level.

Read and Draw Stocks Fibonacci Extension Levels?