What is Difference between Stock Fibonacci Retracement & Stocks Fibonacci Extension?

How to use Stock Fibonacci Retracement & Extension and the Difference between Stock Fibonacci Retracement & Extension

Stocks Fib Retracement Levels

Fibo retracement is drawn between 2 chart points but Fib extension is plotted using 3 chart points.

Stock Fibonacci Retracement Level example illustrated and explained below where the stocks trend is heading down between Chart point 1 & Chart point 2, then after the Chart point 2 the stocks price retraces then it continues moving upward in the original upwards trend. Note that this Stock Fibonacci Retracement Levels indicator is drawn from Chart point 1 to Chart point 2 in direction of the trend.

Stock Fib Retracement Levels - How to Draw Stock Fibonacci Retracement Zones

Stocks Fibonacci Extension Levels

Fibo retracement is drawn between 2 chart points but Fib extension is plotted using 3 chart points.

To draw these 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 retracement reaches is used as chart point 3 for Fibonacci extension.

The Stocks Fibonacci Extension example illustrated and explained below shows the 3 chart Points where the Stocks Fibo Extension 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 retracement reached as shown and illustrated on the Stocks Fibonacci Extension examples illustrated & described below.

Stocks Fibo Extension Levels - How to Draw Stocks Fibonacci Extension Levels

Please note where these Stocks Fib Extension areas are drawn - Stocks Fibonacci Extension levels are plotted above the Stocks Fibonacci Extension indicator, these are the points where a trader will place the take-profit orders.