How Do I Analyze 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.
In the Fibo Retracement Strategy Method illustration explained & illustrated and shown 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% Fib retracement level & then it continues moving downwards in the original downwards trend direction. Note that this Fib retracements 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 zone 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 zone & did not get to 50.00% Fib price retracement zone. Many traders use 38.2% Fibonacci price retracement zone because most of the times the price retracement doesn't 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 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% Fib retracement.
How Do You Interpret Retracement on a Down-ward Trend
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