Indices Trading Draw Fibonacci Projection Levels

How Do I Trade Indices and Draw Fibonacci Projection Levels?

Traders use Fibonacci projection levels to estimate where the trend movement will reach. There are two commonly used Fibonacci projection levels - 61.8% Fibonacci Projection Level and 100% Fibonacci Projection Levels, these fibonacci projection levels are used for setting indices take profit levels.

To draw Fibonacci Projection areas on trading indices chart we wait until the stock indices price retracement is complete and the stock indices price starts to move in original direction of the stock indices trend. Where the stock indices price retracement reaches is used as chart point 3. Fibonacci Projection Trading Indices Indicator is plotted using 3 chart points as shown on the Fibo projection trading indices example explained below of how to plot the Fibonacci Projection Trading Stock Indices Indicator Tool.

The Fibonacci projection example explained and illustrated below shows the 3 Stock Indices Chart Points where the Fibonacci projection trading indices indicator is drawn, marked as Stock Indices Chart point 1, Stock Indices Chart point 2 & Stock Indices Chart point 3.

Stock Indices Chart point 1 is where the indices trend started, Stock Indices Chart point 2 is where the indices trend pulled back & retraced and Stock Indices Chart point 3 is where the indices retracement reached as shown on Fibo Projection Trading Stock Indices Indicator Tool example explained below.

Indices Trading Draw Fibonacci Projection Levels - How to Draw Fibonacci Projection Levels?

Please note where these Fib Projection areas are plotted - Fibonacci Projection zones are plotted above the Fib trading indices indicator, these are the stock chart points where a trader will place the indices take profit orders using these Fibonacci Projection Levels - 61.8% and 100.0% Fibonacci Projection Areas.

Drawing Fib Projection Zones on an Upward Indices Trend

We use Fibo expansion levels to estimate where the trend movement will reach. There are two commonly used Fibonacci projection levels: 61.8%Fibonacci Projection Level and 100% Fibonacci Projection Level, these Fibonacci Projection Levels are used for taking profit.

On the Fib projection trading indices indicator example explained and illustrated below you can see that the Fibonacci projection trading technical indicator is plotted along the direction of the trend, since the trend is upward - the Fib projection levels trading indices indicator is drawn upwards.

These Fib projection levels are displayed as horizontal lines above the Fib Projection trading indices indicator, showing indices profit taking areas. In the trading indices example explained below if you had used the 100.0% Fibonacci projection level the you would have made good profit from this trade setup.

Drawing Fibonacci Projection Zones Trading Stock Indices Indicator on an Upward Indices Trend

From the above Fibonacci projection trading indices indicator example, upward trend continued and both 61.8% & 100.0% Fibonacci projection levels were all hit after which stock indices price retraced again after getting to the 100.00% Fibonacci Projection level.

Drawing Fib Projection Areas on a Downward Indices Trend

Since we use the Fib projection trading indicator tool to estimate indices take profit levels, how do we draw Fibonacci Projection in a downward Indices trend?

We draw the Fibonacci projection trading tool from chart point 1 to chart point 2 to chart point 3 as shown on Fibo projection trading indices example explained below. Remember we always draw this Fibo projection tool in direction of the stock indices trend. In the Fibonacci projection example explained and illustrated below, can you figure what's the direction which we have plotted it? That's right - downward direction.

Try and identify the difference between how we have drawn Fibo projection levels trading indices indicator above and how Fibonacci Projection levels trading indices indicator is drawn below. This time you would also have used Fibonacci projection level 100.0%, just where the stock indices price reached as shown on the Fibonacci projection levels trading indices example explained and illustrated below. This would have been a good indices take profit area.

Drawing Fibonacci Projection Zones Trading Stock Indices Indicator on a Downward Indices Trend

From the Fibonacci projection levels trading indices indicator example above, after plotting this Fibonacci projection levels trading indices tool there are 2 levels that are used to show the indices profit taking areas - these two Fibonacci projection levels are drawn as horizontal lines across the stock indices price chart marked as 61.80% Stock Indices Trading Fibo Projection Level and 100% Fibo Projection Level.

Interpret and Draw Fibonacci Projection Levels