### Fibonacci Retracements and Expansions

Fibonacci Retracements and Expansions both start with a trend line (base line) and divide it into the so-called Fibonacci levels.

When using Fibonacci Retracements, the horizontal lines at those levels are believed to provide support / resistance when the price moves into the opposite direction of the current trend (retracements). To draw Fibonacci Retracements, you need two reference points (A and B) that define the base line. Both reference points are positioned at recent consecutive pivots (for example, a high and the following low). The vertical distance between the two reference points is divided into the Fibonacci levels.

When using Fibonacci Expansions, the horizontal lines at those levels are believed to provide support / resistance when the price starts to move into the opposite direction of the current trend, but later reverses into the original direction. Fibonacci Expansions therefore need a third reference point (C) in addition to the two reference points of Fibonacci Retracements. This reference point is positioned at a potential pivot. You can convert Fibonacci Retracements to Fibonacci Expansions, and vice versa, by setting the third reference point.

All Fibonacci drawing tools are based on the belief that the price development of securities is related to the numbers of the Fibonacci sequence, a mathematical series of numbers that was discovered in the twelfth century, and the so-called Fibonacci levels, which are derived from the ratios of consecutive Fibonacci numbers. Fibonacci numbers and Fibonacci ratios also appear in nature, for example in the arrangement of leaves in a sunflower, and in the golden ratio, which is used for example in architecture and paintings.

The base line (reference line) is hidden per default, but you can choose to display it on the chart. You can also use a color gradient across all or selected Fibonacci levels. Additionally, you can choose which levels are displayed, customize the ratios used to calculate the levels, change the line style for the level lines, and show / hide the labels and prices for each level: See Customizing Fibonacci Retracements and Expansions. Fibonacci Retracements and Expansions are automatically drawn behind other chart objects (in the background of the chart). See also Moving and Copying Drawing Objects.

To draw Fibonacci Retracements

▪       Click on the Fibonacci Retracements icon on the Drawing toolbar:

▪       Click on the chart at the first reference point of your base line (A) and hold the mouse button down.

▪       Move the mouse pointer to the second reference point of your base line (B) and release the mouse button.

To draw Fibonacci Expansions

▪       Click on the arrow next to the Fibonacci Retracements icon on the Drawing toolbar, and then click on the Fibonacci Expansions icon:

▪       Click on the chart at the first reference point of your base line (A) and hold the mouse button down.

▪       Move the mouse pointer to the second reference point of your base line (B) and release the mouse button.

▪       Click on the third reference point (C).

To convert Fibonacci Retracements to Fibonacci Expansions

▪       Click on the drawing object to select it.

▪       Click on the third reference point that is positioned to the right of the second reference point and drag it to the next pivot.

▪       The Fibonacci Retracements are automatically converted to Fibonacci Expansions.

To convert Fibonacci Expansions to Fibonacci Retracements

▪       Click on the third reference point and drag it near the second reference point.

▪       The Fibonacci Expansions are automatically converted to Fibonacci Retracements.

You can extend the Fibonacci levels to the right by using extension points: See Extending and Shortening Lines with Extension Points. To hide some of the levels, see Hiding and Showing Lines / Levels with Visibility Points.