Fibo Extension Strategy using Fibo Expansion Levels
Fib expansion is drawn using 3 chart points.
To draw Fibonacci Expansion areas we wait until the bitcoin price retracement is complete and the bitcoin price starts to move in the original direction of the Bitcoin trend. Where the retracement reaches is used as the point 3.
The Fib expansion example illustrated below shows the three Chart Points where the Fibonacci extension technical indicator is drawn, labeled as Chart point 1, 2 and 3. Point 1 is where the btcusd crypto trend started, Point 2 is where the btcusd crypto trend pulled back and retraced & Chart point 3 is where the retracement reached as shown on the Fibo Expansion Tool example illustrated below.
Fib Expansion Strategy using Fib Expansion Areas
Please note where these Fibo Extension levels are drawn - Fibo Extension levels are drawn above the Fibonacci Technical Indicator, these are points where the trader will set the takeprofit orders using these Fibonacci Expansion Levels - 61.80% & 100% Fib Expansion Areas.
Drawing Fib Expansions on an Upward BTCUSD Trend
We use Fibo expansion areas to try to project where bitcoin crypto currency trend movement will get to. There are Two important Fib expansion areas: 61.8% & 100% Fibo Expansion Areas, these are used for taking profit.
On the Fib expansion example illustrated below you can see that the Fibonacci expansion indicator is plotted along the direction of the btcusd crypto trend, since the bitcoin trend is upward - the Fibonacci extension is drawn upwards.
These Fib extension levels are shown as horizontal lines above the Fibonacci Expansion technical indicator, showing profit taking areas. In the example illustrated below if you had used of 100% Fibonacci expansion you would have made nice profit from the trade set-up.
Drawing Fibonacci Expansion Levels on an Upward Bitcoin Trend - Fibo Expansion Strategies in Bitcoin Trading
From the above Fib extension examples, the upward bitcoin trend continued & both 61.80% & 100.0% Fibonacci expansion levels were all hit after which bitcoin price retraced again after hitting the 100.0 % Fibo Expansion area.
Drawing Fibonacci Expansion Areas on a Downward Bitcoin Trend
Since we use this Fibonacci expansion tool to estimate takeprofit areas, how do we draw it in a downward trend?
We draw the Fibo expansion indicator from chart point 1 to 2 to Three as shown below. Remember we always draw this Fibonacci expansion tool in direction of the trend. In the Fibonacci expansion example shown below, can you figure what direction we've plotted it? That is right - downward direction.
Try and identify the difference between how we have plotted Fibonacci expansion above and how Fibonacci Expansion is drawn below. This time you'd also have used Fibo expansion level 100 %, just where the bitcoin crypto currency price reached as illustrated on the example shown below. That would have been a nice tp order area.
Fibo Expansion Strategies in Crypto Trading
From Fibonacci extension examples above, after drawing this Fibonacci expansion tool there are two levels that are used to show the profit taking areas, these 2 Fibo expansion levels are drawn as horizontal lines across the bitcoin price chart.
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