How Can I Interpret a Retracement on a Down-ward Trend?
Trade a Retracement on a Down-ward Trend
The Fib retracements tool indicator is placed on a chart in an downward trend & this Fib retracements tool then calculates the price retracement levels for the downward trend on the chart. Fib retracements tool is used by many traders as a retracement technical indicator.
The Fibonacci Retracement Strategy shows how prices move between different points on a chart. For instance, it follows this tactical approach when the price falls from point 1 to point 2 and then returns to the 38.2% Fib level before continuing its decline. This Fib retracements indicator is drawn from chart point 1 to chart point 2 in the direction of the market trend (Downward Trend Direction).
Recognizing this as a temporary price dip within the established trend, we initiated a sell order for the indices at the 38.2% Fibonacci retracement level, setting the stop loss just above the 61.8% Fibonacci pullback zone.
The price retracement in this case reached the 38. 2% Fib price retracement zone but not the 50. 00% Fib price retracement zone. Because the price retracement seldom reaches the 50. 0% Fibonacci price retracement zone, many traders employ the 38. 2% Fibonacci price retracement zone.
How Can You Analyze Retracement on a Down-ward Trend?
Description of the Indices Fibonacci Retracement Strategy with an Example
The Fibo Retracement Strategy Method shown above gives an example of a Fib retracement setup where the price goes back right after reaching the 38.20% Fibonacci price drop area.
The 38.2% Fibonacci level resisted the price pullback. It was ideal for a sell limit order on indices. Price dropped fast after touching it.
How Can You Analyze Retracement on a Down-ward Trend
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