How to Trade With Stock Fibonacci Expansion

Fibonacci expansion is drawn using Three chart points.

To draw Stocks Fibonacci Expansion levels 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 retracement reaches is used as chart point 3.

The Fibonacci expansion example illustrated and explained below shows the 3 Chart Points where the Fibonacci expansion indicator is drawn, marked as Chart point 1, 2 and 3. Chart point 1 is where the stocks trend started, Chart point 2 is where the stocks trend pulled back and retraced & Chart point 3 is where the stocks retracement reached as displayed on the Stocks Fibonacci Expansion Tool examples illustrated & described below.

Stocks Trade With Stock Fibonacci Expansion?

Please note where these Stocks Fib Expansion levels are plotted - Stocks Fibonacci Expansion levels are plotted above the Fib Indicator, these are the points where the trader will place the takeprofit orders using these Stocks Fibo Expansion Levels - 61.8% & 100% Stocks Fibonacci Expansion Levels.

Drawing Fibonacci Expansion Levels on an Upward Stock Trend

We use Fibo expansion levels to estimate where the market trend movement will reach. There are Two important Fibo expansion areas: 61.8% and 100% Stocks Fibonacci Expansion Levels, these are used for taking profit.

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

These Fibo expansion levels are displayed as horizontal lines above the Stocks Fibo Expansion indicator, showing profit-taking areas. In the stocks example illustrated and explained below if you had used of 100% Fibonacci expansion you would have made nice profit from the trade set-up.

Drawing Fib Expansion Levels on an Upwards Stocks Trend - Stocks Fibonacci Expansion Strategies in Stocks

From the above Fibonacci expansion examples, the upward trend continued & both 61.80% and 100.00% Fibonacci expansion levels were all hit after which stocks price retraced again after hitting the 100.0 % Stocks Fibonacci Expansion level.

Drawing Stocks Fib Expansion Areas on a Downward Stocks Trend

Since we use this Fib expansion tool to estimate take profit levels, how do we draw it in a downwards Stocks trend?

We draw the Fibonacci expansion indicator from chart point 1 to 2 to 3 as shown below. Remember we always draw this Fibonacci expansion tool in direction of the trend. In the Fibonacci expansion example illustrated and explained below, can you figure what direction we have drawn it? That is right - downwards direction.

Try and identify the difference between how we have plotted Fibonacci expansion above and how Stocks Fibonacci Expansion is drawn below. This time you would also have used Fibonacci expansion level 100%, just where the price reached as shown on the stocks example illustrated and explained below. That would have been a nice take profit area.

Drawing Fib Expansion Areas on a Downwards Stocks Trend - Stocks Fibonacci Expansion Strategies in Stocks

From the Fib expansion example above, after plotting this Fib expansion tool there are 2 levels which are used to show the profit taking areas, these two Fibonacci expansion levels are drawn as horizontal lines across the stocks price chart.