How to Draw Stocks Fib Extension

How Do I Use Fibonacci Extension Levels on Stocks Chart?

We use Stocks Fibo Extension Levels to estimate where the trend movement will reach. There are Two important Stocks Fibonacci Extension levels: 61.80% and 100% Stocks Fibo Extension Areas, these are used for taking profit.

To draw Stocks Fibonacci Extension levels on the stock chart 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. Stocks Fibo Extension Technical Indicator is plotted using three chart points as shown on the stocks example illustrated and explained below of how to plot the Stocks Fibonacci Extension Technical Indicator Tool.

The Stocks Fibonacci Extension example illustrated and explained below shows the 3 Chart Points where the Stocks Fibonacci Extension indicator is drawn, marked as Chart point 1, Chart point 2 and Chart point 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 Extension Technical Indicator Tool example illustrated & explained below.

How to Trade With Stocks Fibonacci Extension - How to Draw Fibonacci Extension Levels on Stocks Charts

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

Drawing Fibonacci Extension Levels on an Upward Stock Trend

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

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

These Stocks Fibonacci Extension zones are shown as horizontal lines above the Stocks Fibonacci Extension technical indicator, showing profit taking areas. In the stocks example illustrated and explained below if you had used of 100.0% Stocks Fibo Extension level you would have made a nice profit from using this setup.

Drawing Stocks Fibonacci Extension Indicator on an Upward Stocks Trend - Stocks Fibonacci Extension Tool

From the above Stocks Fibonacci Extension indicator examples, the upwards trend continued & both 61.80% and 100.00% Stocks Fibonacci Extension zones were all hit after which stocks price retraced again after getting to the 100.00% Stocks Fibonacci Extension level.

Drawing Fib Extension Levels on a Downwards Stock Trend

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

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

Try and identify the difference between how we have plotted Stocks Fibonacci Extension technical indicator above & how Stocks Fibonacci Extension technical indicator is drawn below. This time you would also have used Stocks Fibonacci Extension level 100.00%, just where the price reached as shown on the stocks example illustrated and explained below. That would have been a good take profit area.

Drawing Stocks Fibonacci Extension Indicator on a Downward Stocks Trend - Stocks Fibonacci Extension Tool

From the Stocks Fibonacci Extension indicator example above, after plotting this Stocks Fibo Extension tool there are 2 levels which are used to show the profit taking areas, these 2 Stocks Fibo Extension areas are drawn as horizontal lines across the stocks price chart marked as 61.8%Stocks Fibonacci Extension Level & 100% Stocks Fib Extension Level.