How Do I Analyze a Retracement on a Down-ward Trend?

Trade a Retracement on a Down-ward Trend

The Fib retracement levels tool indicator is placed on a chart in an down ward trend & this Fib retracement levels tool then calculates the price retracement levels for the downward trend on the chart. Fib retracement levels tool is used by many traders as a retracement technical indicator.

In the Fibo Retracement Strategy Method example explained and illustrated below the price is moving down between chart point 1 and chart point 2 - then after chart point 2 the price then retraces up to 38.2% Fibonacci retracement level and then it continues moving downwards in the original downwards trend direction. Note that this Fib retracement levels indicator is drawn from chart point 1 to chart point 2 in direction of the trend (Downward Trend Direction).

Because we know this is just a price pull back depending on the trend we put a indices sell order at 38.2% Fibonacci price retracement level and a stop loss order just above 61.8% Fibonacci price pull back zone.

In this example the price retracement reached 38.2% Fib price retracement level & did not get to 50.00% Fib price retracement level. Many traders use 38.2% Fibonacci price retracement level because most times the price retracement does not always get to 50.0% Fibonacci price pull back zone.

How Do You Interpret Retracement on a Down-ward Trend?

Explanation of Indices Fibo Retracement Strategy Method Example

The Fibo Retracement Strategy Method example above is a Fib retracement setup where the price retraces immediately after touching the 38.20% Fibonacci price pull back zone.

38.2% Fibo Retracement provided lots of resistance for the price retracement - this was the best point for a trader to place a indices sell limit trading order as the price quickly moved down after hitting this 38.2% Fibonacci retracement level.

How Do You Interpret Retracement on a Down-ward Trend

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