How to Draw Fib Expansion IndicatorTool on Down-wards Indices Trend

How Do You Draw Fib 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 draw 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 Fib Expansion zone 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 Fibonacci Expansion on Down Indices Trend

From the Fibonacci Expansion tool example above, after plotting this Fibonacci Expansion indicator tool there are two 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 Fibonacci Expansion Levels on Indices Charts

We use Fib Expansion zones to estimate where the trend movement will reach. There are two 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 Fib Expansion zones on the stock indices chart we wait until the stock indices price retracement is complete & 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 IndicatorTool.

The Fibonacci Expansion examples illustrated below shows the 3 Chart Points where the Fibonacci Expansion indicator is plotted, marked as Chart point 1, Chart point two and Chart point 3.

Chart point 1 is where the indices trend started, Chart point 2 is where the indices trend pulled back and retraced and Chart point 3 is where the stock indices retracement reached as shown on the Fib Expansion Indicator Tool example explained below.

How to Draw Fibonacci Expansion IndicatorTool on Down-wards 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 Expansions - 61.8 % Fibonacci Expansion Level and 100.0% Fibo Expansion Level.