How Do You Analyze Fib Projection Zones on Stock Indices Charts?
How Do I Trade Fibonacci Projection Zones on Indices Charts?
Fibonacci projection technical indicator is drawn using 3 stock points.
To draw Fib Projection zones we wait until the stock price retracement is complete and the stock price starts to move in original direction of the stock trend. Where the stocks price retracement reaches is used as stocks chart point 3.
The Fibo projection stock trading example explained and illustrated below illustrates the 3 Points where the Fibo projection indicator is plotted, labeled as Chart point 1, 2 & 3. Point 1 is where the market trend started, Point 2 is where the trend pulled back and retraced & Chart point 3 is where the stock price retracement reached as illustrated on the Fib Projection Indices Tool stocks trading examples explained below.
How Do You Interpret Fibonacci Projection Levels on Indices Charts?
Please note where these Fib Projection levels are plotted - Fibo Projection levels are drawn above the Fibo Indices Indicator, these are the points where the trader will set the indices takeprofit orders using these Fibo Projection Levels - 61.8% and 100% Fibo Projection Areas.
Drawing Fibo Projection Zones on an Upward Indices Trend
We use Fibonacci projection levels to estimate where trend move will reach. There are two important Fibonacci projection levels: 61.8 % and 100% Fibo Projection Levels, these Fibo Projection Levels are used for setting indices tp order levels.
On the Fib projection stock trading example explained and illustrated below you can see that the Fibonacci projection stock indicator is plotted along the direction of the trend, since the trend is upwards - the Fib projection is drawn upwards.
These Fib projection levels are illustrated as horizontal lines above the Fibonacci Projection technical indicator, showing profit taking areas. In the stock trading example explained and illustrated below if you had used of 100% Fibonacci projection you would have made nice indices profit from the trade setup.
Drawing Fib Projection Levels on an Upwards Trend - Fibo Projection Strategies in Indices Trading
From the above Fib projection examples, the upward trend continued and both 61.8% and 100.00% Fibonacci projection levels were all hit after which price retraced again after getting to the 100.00% Fibo Projection zone.
Drawing Fib Projection Areas on a Downward Indices Trend
Since we use this Fibo projection tool to estimate indices takeprofit areas, how do we draw it in a downwards trend?
We draw the Fib projection indicator from stock chart point 1 to 2 to 3 as illustrated below. Remember we always draw this Fibonacci projection tool in direction of the stock trend. In the Fibonacci projection stock trading example explained and illustrated below, can you figure out what direction we've drawn it? - downwards direction.
Try and identify the difference between how we have drawn Fibonacci projection above and how Fibonacci Projection is drawn below. This time you'd also have used Fib projection zone 100%, just where the stock price reached as shown on the stock trading example explained and illustrated below. That would have been a nice indices take profit order area.
Drawing Fibo Projection Areas on a Downwards Trend - Fibo Projection Strategies in Indices Trading
From the Fibonacci projection stock trading example above, after plotting this Fibonacci projection indices tool there are 2 levels which are used to show the indices profit taking areas, these two Fibonacci projection indices levels are drawn as horizontal lines across the stock chart.
How Do You Interpret Fibonacci Projection Levels on Indices Charts
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