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