How to Draw Fibonacci Extension Technical Indicator Tool on Upwards Indices Trend
How Do I Draw Fibonacci Extension for Indices Uptrend?
We use Fibo Extension Levels to estimate where the trend movement will reach. There are 2 commonly used Fibo Extension areas: 61.80% Indices Fibo Extension Level and 100% Fibo Extension Level, these Fib Extension Levels are used for setting take profit areas.
On the Fibonacci Extension indicator example explained below you can see that the Fibonacci Extension technical indicator tool is plotted along the direction of the trend, since the trend is up - the Fibonacci Extension technical indicator is plotted upwards.
These Fibonacci Extension levels are displayed as horizontal lines above the Fib Extension technical indicator, showing the profit taking areas. In the stock indices example explained below if you had used 100.00% Fib Extension level you would have made good profit from this trading setup.
How to Draw Fibo Extension on Up Indices Trend
From the above Fibonacci Extension indicator tool example, the upward trend continued and both 61.8% & 100.00% Fibo Extension levels were all hit after which the stock indices price retraced again after getting to the 100.00% Fibonacci Extension level.
From the Fibonacci Extension tool example above, after plotting this Fibonacci Extension tool there are 2 levels that are used to show the profit taking areas, these 2 Fibonacci Extension levels are plotted as horizontal lines across the stock indices chart marked as 61.8% Indices Fibo Extension Level and 100% Fibonacci Extension Level.
Explanation of How to Draw Fibonacci Extension Levels on Stock Indices Charts
We use Fibonacci Extension Areas to estimate where the market trend movement will reach. There are 2 important Fibonacci Extension areas: 61.80% and 100% Fibonacci Extension Levels, these are used for taking profit.
To draw Fibonacci Extension 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 Extension Indicator is plotted using 3 chart points as illustrated on the stock indices example explained below of how to plot the Fib Extension Technical Indicator Tool.
The Fib Extension example explained below shows the 3 Chart Points where the Fibonacci Extension technical indicator is plotted, marked as Chart point 1, Chart point 2 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 & Chart point 3 is where the stock indices retracement reached as shown on the Fib Extension Technical Indicator Tool examples explained below.
How to Draw Fibo Extension Technical Indicator Tool on Upwards Indices Trend
Please note where these Fibonacci Extension areas are plotted - Fibonacci Extension zones are drawn above the Fibonacci indicator, these are the chart points where one will set takeprofit orders using these Fib Extension Levels - 61.80% and 100.00% Fibonacci Extension Areas.
