What's Difference between XAUUSD Fibo Retracement and XAUUSD Fibonacci Extension?
How to use Fibo Retracement and Extension and the Difference between Fibo Retracement and Extension
Gold Trading Fib Retracement Levels
Fib retracement is drawn between 2 chart points but Fib extension is plotted using three chart points.
Fibonacci Retracement Level example illustrated and explained below where the gold trend is moving downwards between Chart point 1 and Chart point 2, then after Chart point 2 the xauusd trading price retraces then it continues heading upwards in the original upward trend. Note that this Fibonacci Retracement Levels indicator is drawn from Chart point 1 to Chart point 2 in direction of the market trend.
Fibonacci Retracement Levels - How to Draw Fibo Retracement Levels
Fibonacci Extension Levels
Fib retracement is drawn between 2 chart points but Fib extension is plotted using three chart points.
To draw these Fibo Extension levels we wait until the xauusd price retracement is complete & the xauusd price starts to move in original direction of the Gold trend. Where the retracement reaches is used as chart point Three for Fibonacci extension.
The Fibonacci Extension example illustrated and explained below shows the 3 chart Points where the Fibonacci Extension indicator is drawn, marked as chart point 1, 2 & 3. Chart point 1 is where the gold trend started, Chart point 2 is where the gold trend pulled back and retraced & Chart point 3 is where the retracement reached as shown and illustrated on the Fibonacci Extension example illustrated and explained below.
Fibonacci Extension Levels - How to Draw Fibo Extension Zones
Please note where these Fibonacci Extension areas are drawn - Fibo Extension zones are drawn above the Fibo Extension indicator, these are the points where a trader will set the take-profit orders.
