What is Difference between Stock Index Fibo Retracement & Indices Fibonacci Expansion?

Stock Indices Fibonacci Retracement Levels

Fibonacci retracement is drawn between 2 chart points but Fibo expansion is drawn using 3 chart points.

Fibonacci Retracement example explained and illustrated below where the indices trend is heading down between Chart point 1 and Chart point 2, then after Chart point 2 the stock indices trading price retraces then it continues moving up in the original upward trend. Note that this Fibonacci Retracement indicator is drawn from Chart point 1 to Chart point 2 in direction of the trend.

Fibonacci Retracement Levels - How to Draw Fib Retracement Zones

Stock Indices Trading Fib Expansion Levels

Fibonacci retracement is drawn between 2 chart points but Fibo expansion is drawn using 3 chart points.

To draw these Fibonacci Expansion zones we wait until the stock indices trading price retracement is complete & stock indices trading price starts to move in original direction of the Indices trend. Where the retracement reaches is used as chart point 3 for Fibonacci expansion.

The Fibonacci Expansion example explained and illustrated below portrays the Three chart Points where the Fibonacci Expansion indicator tool is drawn, marked as chart point 1, 2 and 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 retracement reached as shown on Fibonacci Expansion examples explained & illustrated below.

Fibonacci Expansions - How to Draw Fib Expansion Areas

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