How to Draw Fibonacci Expansion Indicator Tool on Downwards Indices Trend
How Do I Draw Fibonacci Retracement Expansion for Indices Downtrend?
We draw the Fibonacci Expansion indicator from chart point 1 to chart point 2 to chart point 3 as shown on the stock indices example explained below. Remember we always plot this Fib Expansion tool in the direction of the trend. In the Fibonacci Expansion example explained below, can you determine what's the direction which we have plotted it? That's right - downward direction.
As a trader you would also have used Fibonacci Expansion level 100.0%, just where the stock indices price reached as illustrated on the Fibonacci Expansion example explained and illustrated below. That would have been a good take profit area.
How to Draw Fib Expansion on Down Indices Trend
From the Fibonacci Expansion tool example above, after plotting this Fibonacci Expansion indicator tool there are 2 levels that are used to show the profit taking levels, these two Fibo Expansion zones are plotted as horizontal lines across the stock indices chart marked as 61.8% Indices Fibo Expansion Level and 100% Fibonacci Expansion Level.
Explanation of How to Draw Fib Expansion Levels on Indices Charts
We use Fibo Expansion levels to estimate where the trend movement will reach. There are 2 commonly used Fibo Expansion areas: 61.8% Fibo Expansion Level and 100% Fibonacci Expansion Areas, these are used for setting taking profit levels.
To draw Fibonacci Expansion levels on the stock indices chart we wait until the stock indices price retracement is complete and the stock indices price starts to move in original direction of the Indices trend. Where the stock indices price retracement reaches is used as chart point 3. Fibonacci Expansion Indicator tool is drawn using three chart points as shown on the stock indices example explained below of how to plot the Fib Expansion Technical Indicator Tool.
The Fibonacci Expansion examples illustrated below shows the 3 Chart Points where the Fibonacci Expansion technical indicator is plotted, marked as Chart point 1, Chart point 2 & Chart point 3.
Chart point 1 is where the indices trend started, Chart point 2 is where the indices trend pulled back and retraced & Chart point 3 is where the stock indices retracement reached as shown on the Fib Expansion Indicator Tool example explained below.
How to Draw Fib Expansion Indicator Tool on Downwards Indices Trend
Please note where these Fibonacci Expansion zones are plotted - Fibo Expansion zones are drawn above the Fibonacci indicator, these are the chart points where one will set takeprofit orders using these Fibonacci Expansion Levels - 61.8% Fibonacci Expansion Level and 100.0% Fibo Expansion Level.
