How to Draw XAUUSD Fib Extension on Downward XAUUSD Trend
Drawing Fib Extension Areas on a Downwards XAUUSD Trend
We draw the Fibo Extension indicator from chart point 1 to chart point 2 to chart point 3 as shown on the xauusd examples illustrated below. Remember we always plot this Fibonacci Extension tool in the direction of the trend. In the Fibonacci Extension example shown below, can you figure what direction we have plotted it? That's right - downwards direction.
As a trader you would also have used Fibo Extension level 100.0%, just where the price reached as illustrated on the Fibonacci Extension example shown below. That would have been a good take profit area.
How to Draw XAUUSD Fib Extension on Downward XAUUSD Trend - How to Draw Fibonacci Extension on Down XAUUSD Trend
From the Fibonacci Extension tool example above, after drawing this Fibonacci Extension indicator tool there are two levels that are used to show the profit taking levels, these two Fibonacci Extension levels are plotted as horizontal lines across the gold chart marked as 61.8%Fibonacci Extension Level and 100% Fib Extension Level.
Explanation of How to Draw Fib Extension Levels on XAUUSD Charts
We use Fibo Extension Zones to estimate where the trend movement will reach. There are 2 commonly used Fibo Extension areas: 61.8% Fibo Extension Level and 100% Fibonacci Extension Levels, these are used for setting taking profit levels.
To draw Fibonacci Extension levels on the gold chart we wait until the gold price retracement is complete & the price starts to move in original direction of the XAUUSD trend. Where the gold price retracement reaches is used as chart point 3. Fibonacci Extension Indicator tool is drawn using three chart points as shown on the xauusd examples displayed below of how to draw the Fibo Extension Technical Indicator Tool.
The Fibo Extension examples shown below shows the Three Chart Points where the Fibonacci Extension 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 shown on the Fibonacci Extension Technical Indicator Tool example shown below.
How to Draw Fibonacci Extension Gold Indicator Tool on Downwards XAUUSD Trend
Please note where these Fibo Extension levels are plotted - Fibonacci Extension zones are plotted above the Fibo technical indicator, these are the chart points where a trader will set the take profit orders using these Fibonacci Extension Levels - 61.8% Fibonacci Extension Level and 100.0% Fib Extension Level.
