CFD Retracement Technical Indicator CFD Strategy
How Do You Use Trading CFD Fibonacci in CFD?
A good cfd retracement strategy to use is the fibonacci retracement indicator. Fibonacci retracement indicator is used by many traders as a cfd retracement strategy indicator tool.
The fibonacci retracement indicator is placed on a cfd chart and this CFDs Fibonacci Retracement indicator then calculates the retracement levels on the cfds charts.
CFDs Fibonacci Retracement Strategy Examples on Upward CFD Trend and Downwards CFD Trend
CFD Retracement Strategy
In the CFD Retracement Strategy example explained and illustrated below the cfd 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 cfd price continues moving up in the original upwards trend. Note that this retracement indicator is plotted from point 1 to point 2 in the direction of the trend (Upwards Direction).
Because we know this is just a retracement based on our cfd chart cfd trend - using this retracement indicator, we put a buy order just between the levels 38.2% and 50.0% and our stoploss just below 61.8% pull back mark. If you had put 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 upward trend.
How to Trade Retracement on Upwards CFD Trend - CFD Retracement Strategy
Explanation for the Above CFDs Retracement Strategy Example
Once the cfd price hit the 50.0% retracement level, this retracement level provided a lot of support for the cfd price, and afterwards cfd market then resumed the original upwards trend & continued to move up.
23.60% retracement level provides minimum support and isn't an ideal place to place a cfd trading order.
38.20% retracement level provides some support but cfd price in this example continued to retrace upto the 50% zone.
50.00% retracement level provides a lot of support and in this example, this was the ideal place to set a buy cfd trading order.
For this CFD Retracement Strategy example, the cfd price retracement reached the 50.0% retracement level, but most of the time the cfd market will retrace up to 38.2% retracement level and therefore most of the time cfd traders set their buy limit orders at the 38.2% Fibo retracement level, while at the same time placing a stop just below 61.8% Fibonacci retracement level.
CFD Retracement Strategy
In the CFD Retracement Strategy example explained and illustrated below the cfd market is heading downwards between chart point 1 and chart point 2, then after chart point 2 the cfd price then retraces up to 38.2% retracement level then it continues heading downward in the original downward trend. Note that this retracement indicator is plotted from point 1 to point 2 in the direction of the trend (Downwards Direction).
Because we know this is just a retracement based on the cfds chart cfd trend we put a sell order at 38.2% retracement level and a stop loss just above 61.8% retracement level.
If you had put sell order at the 38.2% retracement level as shown on the trade below you would have made a lot of pips afterwards after the price reached the 38.2% retracement level and then resumed the downward cfds trend.
In this trade the retracement of cfd price reached 38.2% retracement level & did not get to 50.00% retracement level. It is always good to use 38.20% retracement level because most times the cfd price retracement doesn't always get to 50.00% retracement level.
How to Trade Retracement on Downwards CFD Trend - CFD Retracement Strategy
Explanation for the Above CFD Retracement Strategy Example
The above CFD Retracement Strategy examples is a cfd retracement setup where the price retraces immediately after touching the 38.2% CFDs Fibonacci Retracement Level.
This CFD Retracement level provided a lot of resistance for the cfd price retracement, this was the best place for a trader to set a sell limit order as a cfd market quickly moved down after hitting this retracement level.
