Fibonacci Extensions Forex indicator use for analysis FX market, Picking out the suitable entry and exit points does not solve the problem because everyone want to know the behavior of a currency beyond swing high or swing low. Is there any way to find out what move is expected from the price of any currency after swing high or swing low is crossed? The answer is Fibonacci Extension. Fibonacci Extension extends the Fibonacci ratios beyond standard 100%. The most popular Fibonacci Extension ratios are 161.8%, 261.8% and 423.6%. Traders use these extension levels to calculate their entry and exit points. The general idea in an uptrend is to take profit at a Fibonacci Extension level but the profit should be on a long trade whereas the general idea in a downtrend is to take profit on a short Forex trade at a Fibonacci Extension level.
Construction of Fibonacci Extension Forex Indicator
Fibonacci Extensions include three price points. These are swing high, swing low and the swing point at which price of a currency reversed from a retracement. Fibonacci Extension levels can be determined in any chart by three clicks of mouse.
How to draw Fibonacci Extension in an uptrend
See the three steps below to draw Fibonacci Extension in an uptrend.
Click on a swing low.
Drag your cursor and then click on the recent swing high.
Drag your cursor back and then click on a retracement swing low.
The above steps will display Fibonacci extension levels that will show ratio and the price levels. As shown in the figure below the Fibonacci Extension levels are 1.48 (161.8) and 1.46 (261.8).
Fibonacci Extensions Forex Indicator
How to draw Fibonacci Extension in a downtrend
See the three steps below to draw Fibonacci Extension in a downtrend.
Click on a swing high.
Drag your cursor and then click on the recent swing low.
Drag your cursor back and then click on a retracement swing high.
The above steps will display Fibonacci extension levels that will show ratio and the price levels. As shown in the figure below in a Euro/USD chart, the Fibonacci Extension levels are 1.2260 (161.8), 1.2295 (261.8) and 1.2374 (261.8).
Fibonacci Extensions Forex Indicator In A Down Trend