Fib Retracement Strategies in Indices Trade
Fibo Retracement is an indicator used in indices trading to calculate stock price retracement levels in an upwards or a downward trend.
Fibonacci retracement levels are used by stock traders to place and open trades and open trades at a better stock price after stock price has resumed moving in the original and initial trend direction after retracing.
What are Indices Fibo Retracement Areas?
- 23.6 % Indices Trade Fib Retracement
- 38.2% Indices Trade Fibonacci Retracement
- 50.0 % Indices Trade Fibonacci Retracement
- 61.80% Fib Retracement
38.2% and 50.0% Fibo Retracement Areas are most oftenly used
most of the times this is where the price retracement will get to - with 38.2 % Fibo Retracement Level being the most popular/liked and most widely used retracement level in indices.
61.8% Fibonacci Retracement Level is also commonly used to set stoploss order for trades opened using this retracement strategy.
What is Fibo Retracement Method using Fib Retracement Areas?
What is Fibo Retracement Method using Fib Retracement Areas?
Fib Retracement Strategies in Indices Trade - Fibo Retracement Technical Indicator Tool Explained with Example
Fib Retracement Strategies in Indices Trade - Fibo Retracement Technical Indicator Tool Explained with Example
How Do You Draw Fib Retracements?
Fibonacci Retracement Levels tool is drawn in direction of the market price trend as displayed and illustrated in the two Fib retracement example below:.
Fib Retracement Method using Fibo Retracement Levels
In the trading analysis illustration explained & illustrated and shown below the price is moving up between chart point 1 & chart point 2 then after chart point 2 it retraces downward to 50.0 % retracement level then stock price continues moving up in the original and initial up-ward trend. Note that this retracement technical indicator is drawn and plotted from point 1 to point 2 in the direction of the trend (Upwards Direction).
How Do I Trade with Indices Trade Fib Retracement?
Fib Retracement Method using Fibo Retracement Levels in an Up Trend
Once the price hit the 50.00 % retracement level, this retracement level provided alot of support for the price, & afterward the market then resumed the original upward trend & continued to move upward.
For this Fibonacci retracement strategy illustration, the price retracement reached the 50.00 % retracement level, but most of the time the market will retrace up to 38.2 % retracement area and therefore most of the times traders set their buy limit pending orders at the 38.2% Fibo retracement level, while at same time placing a stop just below 61.8% Fibo retracement level.
Fib Retracement Method using Fibo Retracement Levels
In the Fibonacci retracement strategy illustration explained & illustrated and shown below the market is heading down between chart point 1 and chart point 2, then after chart point 2 the price then retraces up to 38.2 % retracement level and then-it continues heading and going downwards in original downward trend. Note that this retracement technical indicator is drawn and plotted from point 1 to point 2 in the direction of the market price trend (Downward Direction).
How Do I Trade with Indices Trade Fib Retracement?
Fib Retracement Method using Fibo Retracement Levels in a Down Trend
The above Fib retracement strategy example is a retracement setup where price retraces immediately after touching the 38.20% Chart Fibo Retracement Level.
In this Fibo retracement strategy example the retracement of stock price reached 38.20% retracement area and did not get to 50.00% retracement level. It is always good to use 38.2 percent% retracement level because most of the times price retracement doesn't always get to 50.00 % retracement level.
This Retracement level provided alot of resistance for the price retracement, this was the best place for a trader to set a sell limit order as the market quickly headed downward after hitting this stock price retracement area.
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