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