How to Draw Fib Expansion

How Do You Use Fib Expansions on Chart?

We use Fibonacci Expansion levels to try to estimate where trend movement will get to. There are Two important Fibo Expansion areas: 61.8 % and 100% Fibo Expansion Areas, these are used for taking profit.

To draw Fibonacci Expansion levels on the chart we wait til the price retracement is complete & the price starts to head in original direction of trend. Where the price retracement reaches is used as point 3. Fibonacci Expansion Indicator is drawn using 3 chart points as displayed on the examples displayed below of how to draw the Fib Expansion Technical IndicatorTool.

The Fib Expansion example shown below shows the 3 Chart Points where the Fib Expansion technical indicator is plotted, labeled as Chart point 1, Chart point two and Chart point 3.

Point 1 is where the trend started, Point 2 is where the market trend pulled back and retraced & Chart point 3 is where the retracement reached as displayed on the Fib Expansion Indicator Tool example illustrated below.

How Do You Trade with Fib Expansion? - How to Draw Fibonacci Expansions on Charts

Please note where these Fibonacci Expansion areas are drawn - Fib Expansion areas are drawn above the Fibonacci 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 Fib Expansions on an Upward Trend

We use Fibonacci Expansion levels to try to project where trend movement will get to. There are Two important Fibo Expansion areas: 61.8 %Fibonacci Expansion Level and 100% Fibonacci Expansion Level, these Fib Expansions are used for taking profit.

On the Fib Expansion indicator example illustrated & shown below you can see that the Fib Expansion technical indicator is drawn along the direction of the trend, since the trend is upward - the Fibo Expansion tool is drawn upward.

These Fib Expansion areas are displayed as horizontal lines above the Fib Expansion technical indicator, showing the profit taking areas. In the examples shown below if you had used of 100.0% Fibonacci Expansion area you would have made nice profit from the trade setup.

Drawing Fib Expansion Indicator on an Upward Trend - Fibo Expansion Tool

From the above Fib Expansion indicator examples, the upward trend continued & both 61.8% & 100.0% Fibonacci Expansion levels were all hit after which price retraced again after getting to the 100.0% Fibonacci Expansion level.

Drawing Fibonacci Expansions on a Downward Trend

Since we use the Fibo Expansion tool to estimate takeprofit areas, how do we draw Fibonacci Expansion in a down ward trend?

We draw the Fibonacci Expansion indicator tool from chart point 1 to chart point 2 to chart point 3 as displayed on the examples shown below. Remember we always draw this Fibonacci Expansion tool in the direction of the trend. In the Fib Expansion example shown below, can you figure what direction we have plotted it? That's right - downward direction.

Try & spot difference between how we have drawn Fib Expansion indicator above and how Fibonacci Expansion indicator tool is drawn below. This time you would also have used Fib Expansion area 100.00%, just where price reached as depicted on the example shown below. That would have been a nice takeprofit area.

Drawing Fib Expansion Indicator on a Downwards Trend - Fibo Expansion Tool

From the Fib 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 trading price chart marked as 61.8 %Fibonacci Expansion Level and 100% Fibo Expansion Level.