How to Trade Retracement on Upwards XAUUSD Trend
How Do You Draw Fibo Retracement for Uptrend?
The Fibonacci retracement indicator is placed on a chart in an up-ward trending market & this Fibo Retracement indicator then calculates the retracement levels for the upward trend on the charts. Fibo retracement zones indicator is used by many traders as a retracement indicator.
In the XAUUSD Retracement Strategy example shown 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 upwards trend. Note that this Fibonacci retracement indicator is plotted from point 1 to point 2 in the direction of the trend (Upwards Direction).
Because we recognize that this is just a pullback depending 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 & our stop loss just below 61.8% retracement level. If you had put a buy at this point in the trade example shown below you would have made a lot of pips after the price retracement reached the Fib 50.00% level and then continued heading in the original upward trend.
How to Trade XAUUSD Price Retracement on Upward XAUUSD Trend - Fibo Retracement Levels Trading
Explanation for the Above XAUUSD Fib Retracement Strategy Examples
Once the price hit the 50.0% Fibo retracement zone, this pull back area provided a lot of support for price, and afterwards the market then resumed the original upwards trend and continued to move up-wards.
23.6% Fib retracement level provides minimum support & is not an ideal place to place a trade 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 and in this example, this was the ideal place to set a buy trade order.
For this XAUUSD Retracement Strategy example, the price retracement reached the 50.0% Fibo retracement zone, but most of time the market will retrace up to 38.2% Fibo retracement zone & therefore most of the time traders set their buy limit pending orders at 38.2% Fib retracement level, while at same time placing a stop just below 61.8% Fibo retracement level.
