Fibonacci Retracement Strategies in Indices Trading

Fibonacci Retracement is an indicator used in indices trading to calculate stock indices price retracement levels in an upward or a downward indices trend.

Fibonacci retracement levels are used by stock indices traders to place stock indices trades and open stock indices trades at a better stock indices price after stock indices price has resumed moving in the original indices trend direction after retracing.

What are Fibonacci Retracement Levels?

• 23.6% Fibonacci Retracement
• 38.2% Fibonacci Retracement
• 50.0% Fibonacci Retracement
• 61.8% Fibonacci Retracement

38.2% and 50.0% Fibonacci Retracement Levels are the most commonly used

most of the times this is where the stock indices price retracement will reach - with 38.2% Fibonacci 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 stop loss for trades opened using this indices trading retracement strategy.

What is Fibonacci Retracement Strategy using Fibonacci Retracement Levels?

What is Fibonacci Retracement Strategy using Fibonacci Retracement Levels?

Fibonacci Retracement Strategies in Indices Trading - Fibonacci Retracement Indicator Tool Explained

Fibonacci Retracement Strategies in Indices Trading - Fibonacci Retracement Indicator Tool Explained

How Do I Draw Fibonacci Retracements?

Fibonacci Retracement Levels tool is drawn in the direction of the indices trend as shown in the two Fibonacci retracement examples below:.

Fibonacci Retracement Strategy using Fibonacci Retracement Levels?

In the technical analysis example explained and illustrated below the stock indices price is moving up between chart point 1 and chart point 2 then after chart point 2 it retraces down to 50.0% retracement level then stock indices price continues moving up in the original upward indices trend. Note that this stock indices retracement indicator is drawn from point 1 to point 2 in the direction of the indices trend (Upward Direction).

How Do I Trade with Fibonacci Retracement

Fibonacci Retracement Strategy using Fibonacci Retracement Levels in an Up Indices Trend

Once the stock indices price hit the 50.0% retracement level, this retracement level provided a lot of support for the indices price, and afterwards the stock indices trading market then resumed the original upward indices trend and continued to move up.

For this Fibonacci retracement strategy example, the stock indices price retracement reached the 50.0% retracement level, but most of the time the stock indices trading market will retrace up to 38.2% retracement level and therefore most of the time indices traders set their buy limit indices orders at the 38.2% Fibonacci retracement level, while at the same time placing a stop just below 61.8% Fibonacci retracement level.

Fibonacci Retracement Strategy using Fibonacci Retracement Levels

In the Fibonacci retracement strategy example explained and illustrated below the stock indices trading market is moving down between chart point 1 and chart point 2, then after chart point 2 the stock indices price then retraces up to 38.2% retracement level then it continues moving downward in the original downward indices trend. Note that this stock indices retracement indicator is drawn from point 1 to point 2 in the direction of the indices trend (Downward Direction).

How Do I Trade with Fibonacci Retracement

Fibonacci Retracement Strategy using Fibonacci Retracement Levels in a Down Indices Trend

The above Fibonacci retracement strategy example is a stock indices retracement trading setup where the stock indices price retraces immediately after touching the 38.2% Stock Indices Chart Fibonacci Retracement Level.

In this Fibonacci retracement strategy example the retracement of stock indices price reached 38.2% retracement level and did not get to 50.0% retracement level. It is always good to use 38.2% retracement level because most times the stock indices price retracement does not always get to 50.0% retracement level.

This Indices Retracement level provided a lot of resistance for the stock indices price retracement, this was the best place for a indices trader to place a sell limit indices order as the stock indices trading market quickly moved down after hitting this stock indices price retracement level.