How to Draw XAUUSD Trading Fib Expansion
How Do You Use Fibonacci Expansion Levels on XAUUSD Chart?
We use Fibo Expansion levels to estimate where the trend movement will reach. There are Two important Fib Expansion areas: 61.8% and 100% Fibo Expansion Areas, these are used for taking profit.
To draw Fibonacci Expansion levels on the gold chart we wait until the gold price retracement is complete and the gold price starts to move in original direction of the XAUUSD trend. Where the gold price retracement reaches is used as chart point 3. Fibonacci Expansion Technical Indicator is drawn using 3 chart points as displayed on the xauusd examples displayed below of how to draw the Fib Expansion Technical Indicator Tool.
The Fibonacci Expansion example shown 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 xauusd trend started, Chart point 2 is where the xauusd trend pulled back and retraced & Chart point 3 is where the xauusd retracement reached as displayed on the Fibonacci Expansion Indicator Tool example shown below.
How to Trade with Fibonacci Expansion? - How to Draw Fibonacci Expansion Levels on XAUUSD Charts
Please note where these Fib Expansion zones are drawn - Fibo Expansion zones are drawn above the Fib technical indicator, these are the chart points where a trader will set the take-profit orders using these Fib Expansion Levels - 61.80% and 100.00% Fibonacci Expansion Areas.
Drawing Fibonacci Expansion Levels on an Upward Gold Trend
We use Fibonacci Expansion levels to estimate where the trend movement will reach. There are Two important Fibonacci Expansion areas: 61.8%Fibonacci Expansion Level and 100% Fibonacci Expansion Level, these Fibonacci Expansion Levels are used for taking profit.
On the Fibonacci Expansion indicator example illustrated & shown below you can see that the Fibonacci Expansion technical indicator is drawn along the direction of the trend, since the trend is upward - the Fibonacci Expansion indicator is drawn upwards.
These Fibonacci Expansion areas are displayed as horizontal lines above the Fib Expansion technical indicator, showing the profit taking areas. In the xauusd examples shown below if you had used of 100.0% Fibonacci Expansion level you would have made nice profit from the trade setup.
Drawing Fibonacci Expansion Indicator on an Upward XAUUSD Trend - Fibo Expansion Tool
From the above Fibonacci Expansion indicator examples, the upwards trend continued & both 61.8% & 100.0% Fibonacci Expansion levels were all hit after which gold price retraced again after getting to the 100.0% Fibonacci Expansion level.
Drawing Fibo Expansion Levels on a Downward Gold Trend
Since we use the Fibonacci Expansion indicator tool to estimate take profit levels, how do we draw Fibonacci Expansion in a downward XAUUSD trend?
We draw the Fib Expansion indicator from chart point 1 to chart point 2 to chart point 3 as displayed on the xauusd examples shown below. Remember we always plot this Fibonacci Expansion tool in the direction of the trend. In the Fibonacci Expansion example shown below, can you figure what direction we have plotted it? That's right - downwards direction.
Try & spot difference between how we have drawn Fibonacci Expansion indicator above and how Fibonacci Expansion indicator is drawn below. This time you would also have used Fibonacci Expansion level 100.0%, just where the price reached as illustrated on the xauusd example shown below. That would have been a good take profit area.
Drawing Fibonacci Expansion Indicator on a Downwards XAUUSD Trend - Fibo Expansion Tool
From the Fibonacci Expansion indicator example above, after drawing this Fibonacci Expansion tool there are 2 levels that are used to show the profit-taking areas, these two Fibo Expansion zones are drawn as horizontal lines across the gold trading price chart marked as 61.8%Fibonacci Expansion Level and 100% Fibo Expansion Level.
