Two types of Fibonacci expansions
Fibonacci extension levels in the MetaTrader4 trading terminal are provided by two types of grids: "Fibonacci lines"where there are correction levels and standard extension levels, as well as "Fibonacci expansion."where only the levels of expansions - Fibonacci projections are presented. Let's omit the correction levels and consider only expansions.
Standard extension grid
In MetaTrader4 Terminal the Standard Expansion Grid is invoked by the button "Fibonacci lines" on the toolbar. It shows both corrections - in the range from 0% to 100%, and extensions. The default extensions are 161.8%, 261.8% and 423.6%. Other Fibonacci levels, such as 123.6, 138.2, 150, 200, 238.2, 323.6, 400% are also widely used.
On the grid shown in Figure 2, there are many more levels. Hence the question arises, which of them to take for work and what gives each level?
By and large, you can work with the default extensions - they will be enough for exiting trades, if you use the Fibonacci tool for setting TakeProfits. There is not much sense in overloading the chart with levels, in principle.
Fibonacci Extensions by Joe DiNapoli's Method
Another way to calculate impulse wave targets is the Fibonacci extensions proposed by Joe DiNapoli. He also builds his grid by the first wave, but starts to count levels from the end of the correction, as shown in Figure 3.
Note that DiNapoli decided to leave only four levels from the extensions to make the chart look as clean as possible, but the main levels were present. Thus, in Figure 3 we see: 61.8% of the impulse wave, deferred from the end of the corrective wave, then 100%, 161.8% and, finally, 261.8%.
This number of levels is quite enough both for setting TakeProfits and for partial closing a position at each of them. Another good factor in the DiNapoli grid is that it takes into account the magnitude of the correction, while the standard Fibonacci grid takes into account only the length of the impulse.
So we've looked at two different expansion gridsThe most popular one is Fibonacci and the second one is DiNapoli. Both of them can be used quite productively in trading, but for each tactic we advise to choose the most suitable one individually.