How to Draw Oil Trading Fibonacci Extension
How Do You Use Oil Fibo Extension Levels Indicator on Oil Trading Chart?
We use Oil Fibonacci Extension Levels to estimate where the oil trend movement will reach. There are 2 important Oil Trading Fib Extension levels: 61.8% & 100% Oil Fibo Extension Levels, these are used for profit taking.
To draw Oil Trading Fib Extension levels on the crude oil chart we wait until the crude crude oil price retracement is complete and the crude crude oil trading price starts to move in original direction of the Oil trend. Where the crude crude oil price retracement reaches is used as chart point 3. Oil Trading Fib Extension Technical Indicator is drawn using three chart points as shown and illustrated on oil examples displayed below of how to draw the Oil Fibonacci Extension Technical Indicator Tool.
The Oil Fibo Extension example shown and illustrated below shows the 3 Chart Points where the Oil Fibo Extension indicator is drawn, marked as Chart point 1, Chart point 2 & Chart point 3.
Chart point 1 is where the oil trend started, Chart point 2 is where the oil trend pulled back & retraced & Chart point 3 is where the oil retracement reached as shown on the Oil Fibo Extension Technical Indicator Tool examples shown and illustrated below.
How to Trade With Oil Fib Extension – How to Draw Oil Fibo Extension Levels Indicator on Oil Trading Charts
Please note where these Oil Trading Fib Extension levels are drawn – Oil Trading Fib Extension levels are drawn above Fibonacci indicator, these are the chart points where a oil trader will set the take profit orders using these Oil Trading Fib Extension Levels – 61.8% & 100.0% Oil Fibonacci Extension Levels.
Drawing Crude Oil Fibo Extension Levels on an Upward Crude Oil Trend
We use Oil Fibonacci Extension Levels to estimate where the oil trend movement will reach. There are 2 important Oil Trading Fib Extension levels: 61.8%Oil Fibonacci Extension Level & 100% Oil Trading Fib Extension Level, these Oil Fibo Extension Levels are used for profit taking.
On the Oil Trading Fib Extension indicator example shown below you can see that the Oil Fibo Extension tool is drawn along the direction of the oil trend, since the oil trend is upward - the Oil Fibo Extension indicator is drawn upward.
These Oil Fibo Extension levels are displayed as horizontal lines above Oil Trading Fib Extension indicator, showing profit taking areas. In the oil examples shown below if you had used of 100.0% Oil Fibo Extension level the you would have made a nice profit from the trade set up.
Drawing Oil Trading Fib Extension Indicator on an Upward Oil Trend - Oil Trading Fib Extension Trading Tool
From the above Oil Trading Fib Extension indicator examples, the upwards oil trend continued & both 61.80% & 100.0% Oil Trading Fib Extension levels were all hit after which crude crude oil trading price retraced again after getting to the 100.0% Oil Fibo Extension level.
Drawing Oil Fibo Extension Levels Indicator on a Downward Oil Trend
Since we use the Oil Trading Fib Extension indicator tool to estimate take profit levels, how do we draw Oil Trading Fib Extension in a downward Oil trend?
We draw the Oil Trading Fib Extension indicator from chart point 1 to chart point 2 to chart point Three as shown and illustrated on oil examples shown below. Remember we always draw this Oil Trading Fib Extension tool in the direction of the crude oil trend. In the Oil Fibo Extension examples illustrated below, can you determine what is direction we have drawn it? That's right – downwards direction.
Try & spot the difference between how we have drawn Oil Trading Fib Extension indicator above & how Oil Trading Fib Extension indicator is drawn below. This time you would also have used Oil Trading Fib Extension level 100.0%, just where the crude crude oil price reached as displayed on the oil example shown below. That would have been a good take profit area.
Drawing Oil Trading Fib Extension Indicator on a Downward Oil Trend - Oil Trading Fib Extension Trading Tool
From the Oil Trading Fib Extension indicator example above, after drawing this Oil Trading Fib Extension tool there are two levels that are used to show profit taking areas, these two Oil Trading Fib Extension levels are drawn represented as horizontal lines across the crude crude oil trading price chart marked as 61.8%Oil Fibonacci Extension Level & 100% Oil Trading Fib Extension Level.
