Fib Retracement Strategies in Indices Trading
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 trades and open trades at a better stock price after stock price has resumed moving in the original trend direction after retracing.
What are Stock Indices Fibo Retracement Areas?
- 23.6 % Stock Indices Trading Fib Retracement
- 38.2% Stock Indices Trading Fibonacci Retracement
- 50.0 % Stock Indices Trading 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 reach - with 38.2 % Fibo Retracement Level being the most popular 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?
Fibonacci Retracement Strategies in Indices Trading - Fibo Retracement Technical Indicator Tool Explained
Fibonacci Retracement Strategies in Indices Trading - Fibo Retracement Technical Indicator Tool Explained
How Do You Draw Fib Retracements?
Fibonacci Retracement Levels tool is drawn in direction of the market trend as shown in the two Fib retracement example below:.
Fibonacci Retracement Method using Fibo Retracement Levels
In the trading analysis example explained and illustrated below the price is moving up between chart point 1 & chart point 2 then after chart point 2 it retraces down to 50.0 % retracement level then stock price continues moving up in the original up-ward trend. Note that this retracement technical indicator is drawn from point 1 to point 2 in direction of the trend (Upwards Direction).
How Do You Trade with Indices Trading Fib Retracement?
Fibonacci Retracement Method using Fibo Retracement Levels in an Up Trend
Once the price hit the 50.00 percentage% retracement level, this retracement level provided lots of support for price, & afterward the market then resumed the original upward trend & continued to move upward.
For this Fibonacci retracement strategy example, the market 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 time 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.
Fibonacci Retracement Method using Fibo Retracement Levels
In the Fibonacci retracement strategy example explained and illustrated 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 percentage% retracement area then it continues moving downwards in original downward trend. Note that this retracement technical indicator is drawn from point 1 to point 2 in direction of the market trend (Downward Direction).
How Do You Trade with Indices Trading Fib Retracement?
Fibonacci Retracement Method using Fibo Retracement Levels in a Down Trend
The above Fib retracement strategy example is a retracement setup where the 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 times price retracement doesn't always get to 50.00 % retracement level.
This Retracement level provided lots of resistance for the market 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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