Upward Trend Retracement Indicator Strategy

How Do I Draw Fibonacci Retracement for Uptrend?

The Fibonacci retracement indicator is placed on a chart in an upward trending market & this Fibo Retracement indicator then calculates the retracement levels for the upward trend on the charts. Fibonacci retracement levels indicator is used by many traders as a trading retracement trading indicator.

In the Retracement Strategy Method example explained and illustrated below the 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 price continues moving up in the original upward trend. Note that this Fibonacci retracement technical indicator is plotted from point 1 to point 2 in direction of the trend (Upwards Direction).

Because we know this is just a retracement based on our chart trend - using this Fibonacci retracement indicator, we put a buy order just between the levels 38.2% and 50.0% retracement levels and our stop loss just below 61.8% retracement level. If you had put a buy at this point in the trade example explained and illustrated below you would have made a lot of pips after the price retracement reached the Fibonacci 50.0% level and then continued moving in the original upwards trend.

How to Trade Price Retracement on Upwards Trend - Fibo Retracement Levels Trading

Explanation for the Above Fibo Retracement Strategy Method Examples

Once the price hit the 50.0% Fibo retracement area, this retracement level provided a lot of support for the price, & afterward the market then resumed the original upward trend & continued to move upward.

23.60% Fibonacci retracement level provides minimum support and is not an ideal place to set a order.

38.2% Fibonacci retracement level provides some support but price in this example continued to retrace up to the 50 percent zone.

50.0% Fibo retracement level provides a lot of support & in this example, this was the ideal place to set a buy order.

For this Retracement Strategy Method example, the price retracement reached the 50.0% Fibo retracement area, but most of the time the trading market will retrace up to 38.2% Fibo retracement level & therefore most of the time traders set their buy limit orders at the 38.2% Fibo retracement area, while at same time placing a stop just below 61.8% Fibo retracement level.