Dear investors,
I am writing to you to share a trend extension application of a rather interesting technical analysis tool in the investment world - the Fibonacci Retracement indicator. Not only is this indicator fascinating, but it can help you better understand market trends and make smarter investment decisions.
The Fibonacci Retracement indicator is a widely used technical tool for determining support and resistance levels. But what you may not know is that it also has a powerful extended version for predicting future levels that prices may reach. That’s the Fibonacci trend extension indicator I’m going to introduce to you today.
The Fibonacci Trend Extension indicator is used in a similar way to the Retracement indicator, but focuses more on how far prices are likely to go in the future. Let me show you how to apply it:
First, choose a period of price movement, usually a clear up or down band. Then, apply the Fibonacci sequence between the highs and lows of this swing, which will help you find possible expansion targets. These targets can help you build a more confident strategy in the market because they represent where prices are likely to reach.
For example, let's say a stock moves from $10 to $20 and then retraces back to $15. If we wish to predict the next price target, we can apply Fibonacci trend extensions between the highs and lows of this uptrend. This might find some potential extension targets such as $25, $30, etc.
The beauty of this approach is that it doesn’t just focus on the level of price retracements, but also provides more information about where prices are likely to go. Therefore, the Fibonacci trend expansion indicator can help you better understand market trends and provide more references to formulate investment strategies.
I hope this letter can bring you some inspiration and help you better apply the Fibonacci trend extension indicator to improve your investment skills.
good luck,
Heavenly Master of Red Dust
