How to Draw XAUUSD Trading Fib Expansion
How Do I Use Fibonacci Expansion Levels on XAUUSD Chart?
We use Fibonacci Expansion levels to estimate where the trend movement will reach. There are 2 important Fibonacci Expansion levels; 61.8% and 100% Fibonacci Expansion Levels, these are used for taking profit.
To draw Fibonacci Expansion levels on the gold chart we wait until the xauusd trading price retracement is complete and the xauusd trading price starts to move in the original direction of the Gold trend. Where the xauusd trading price retracement reaches is used as chart point 3. Fibonacci Expansion Indicator is drawn using three chart points as shown on the xauusd trading example illustrated and explained below of how to draw the Fibonacci Expansion Indicator Tool.
The Fibonacci Expansion example illustrated and explained below shows the 3 Chart Points where the Fibonacci Expansion indicator is drawn, marked as Chart point 1, Chart point 2 and Chart point 3.
Chart point 1 is where the gold trend started, Chart point 2 is where the gold trend pulled back and retraced and Chart point 3 is where the gold retracement reached as shown on the Fibonacci Expansion Indicator Tool example illustrated and explained below.
How to Trade with Fibonacci Expansion? - How to Draw Fibonacci Expansion Levels on Gold Charts
Please note where these Fibonacci Expansion levels are drawn - Fibonacci Expansion levels are drawn above the Fibonacci indicator, these are the chart points where a trader will set the take profit orders using these Fibonacci Expansion Levels - 61.8% and 100.0% Fibonacci Expansion Levels.
Drawing Fibonacci Expansion Levels on an Upward Gold Trend
We use Fibonacci Expansion levels to estimate where the trend movement will reach. There are 2 important Fibonacci Expansion levels; 61.8% XAUUSD Trading Fib Expansion Level and 100% Fibonacci Expansion Level, these Fibonacci Expansion Levels are used for taking profit.
On the Fibonacci Expansion indicator example illustrated and explained below you can see that the Fibonacci Expansion indicator tool is drawn along the direction of the trend, since the trend is upwards - the Fibonacci Expansion indicator is drawn upwards.
These Fibonacci Expansion levels are displayed as horizontal lines above the Fibonacci Expansion indicator, showing profit taking areas. In the xauusd trading example illustrated and explained below if you had used of 100.0% Fibonacci Expansion level you would have made nice profit from the trade setup.
Drawing Fibonacci Expansion Indicator on an Upward Gold Trend - Fibonacci Expansion Trading Tool
From the above Fibonacci Expansion indicator example, the upward trend continued and both 61.8% and 100.0% Fibonacci Expansion levels were all hit after which xauusd trading price retraced again after getting to the 100.0 % Fibonacci Expansion level.
Drawing Fibonacci Expansion Levels on a Downward Gold Trend
Since we use the Fibonacci Expansion indicator tool to estimate take profit levels, how do we draw Fibonacci Expansion in a downward Gold trend?
We draw the Fibonacci Expansion indicator tool from chart point 1 to chart point 2 to chart point 3 as shown on the xauusd trading example illustrated and explained below. Remember we always draw this Fibonacci Expansion tool in the direction of the trend. In the Fibonacci Expansion example illustrated and explained below, can you figure what direction we have drawn it? That is right - downward direction.
Try and spot the difference between how we have drawn Fibonacci Expansion indicator above and how Fibonacci Expansion indicator is drawn below. This time you would also have used Fibonacci Expansion level 100.0%, just where the price reached as shown on the xauusd trading example illustrated and explained below. That would have been a good take profit area.
Drawing Fibonacci Expansion Indicator on a Downward Gold Trend - Fibonacci Expansion Trading Tool
From the Fibonacci Expansion indicator example above, after drawing this Fibonacci Expansion tool there are two levels that are used to show the profit taking areas, these two Fibonacci Expansion levels are drawn as horizontal lines across the xauusd trading price chart marked as 61.8% XAUUSD Trading Fib Expansion Level and 100% Fibonacci Expansion Level.
