What's Difference between Stock Indices Fibo Retracement and Stock Index Fibonacci Extension?
How to use Fibo Retracement and Extension and the Difference between Fibo Retracement and Extension
Stock Indices Trading Fibo Retracement Areas
Fibonacci retracement is plotted between 2 chart points but Fib extension is plotted using 3 chart points.
Fibonacci Retracement Level example explained and illustrated below where the indices trend is moving down between Chart point 1 & Chart point 2, then after Chart point 2 the stock indices price retraces then it continues moving upward in original upward trend. Note that this Fibonacci Retracement Levels indicator is drawn from Chart point 1 to Chart point 2 in direction of the market trend.
Fibonacci Retracement Levels - How to Draw Fibo Retracement Levels
Fibonacci Extension Levels
Fibo retracement is plotted between 2 chart points but Fib extension is plotted using 3 chart points.
To draw these Fibo Extension levels 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 retracement reaches is used as chart point 3 for Fibo extension.
The Fibonacci Extension example explained below shows the 3 chart Points where the Fibonacci Extension indicator is drawn, marked as chart point 1, 2 & 3. Chart point 1 is where the indices trend started, Chart point 2 is where the indices trend pulled back & retraced and Chart point 3 is where the retracement reached as shown on Fibonacci Extension example described & illustrated below.
Fibonacci Extension Levels - How to Draw Fibo Extension Zones
Please note where these Fibonacci Extension areas are plotted - Fibo Extension zones are drawn above the Fibo Extension indicator, these are the points where a trader will set the takeprofit orders.
