How Do I Analyze Fibonacci Projection Zones on Forex Charts?
How Do You Trade Fibonacci Projection Zones on Forex Charts?
Fibonacci projection indicator is drawn using 3 chart points.
To draw Fibonacci Projection levels we wait until the forex price retracement is complete & the price starts to move in original direction of the trend. Where the forex price retracement reaches is used as chart point 3.
The Fibonacci projection forex trading example below shows the 3 Forex Chart Points where the Fibonacci projection forex technical indicator is drawn, marked as Forex Chart point 1, 2 and 3. Forex Chart point 1 is where the forex trend started, Forex Chart point 2 is where the forex trend pulled back & retraced & Forex Chart point 3 is where the price retracement reached as illustrated on the Fibonacci ProjectionForex Trading Tool forex trading example below.
How Do I Analyze Fibo Projection Zones on Forex Charts?
Please note where these Fib Projection areas are plotted - Fibo Projection zones are plotted above the Fibo Forex Indicator, these are the points where the trader will set the forex take profit orders using these fibonacci Projection Levels - 61.8% and 100% Fibonacci Projection Levels.
Drawing Fib Projection Zones on an Upwards Forex Trading Trend
We use Fibo projection levels to estimate where the trend movement will reach. There are 2 important Fibonacci projection levels: 61.8% and 100% Fibonacci Projection Levels, these Fibonacci Projection Levels are used for setting forex take profit levels.
On the Fibonacci projection forex trading example below you can see that the Fibonacci projection technical indicator is plotted along the direction of the trend, since the trend is upward - the Fibo projection is drawn upward.
These Fibonacci projection levels are displayed as horizontal lines above the Fib Projection indicator, showing profit taking areas. In the forex trading example below if you had used of 100% Fibonacci projection you would have made nice forex trading profit from the forex trade setup.
Drawing Fib Projection Zones on an Upwards Forex Trend - Fibonacci Projection Strategies in Forex Trading
From the above Fibonacci projection forex trading examples, the upward trend continued & both 61.80% and 100.00% Fibonacci projection levels were all hit after which forex price retraced again after getting to the 100.00% Fibonacci Projection level.
Drawing Fib Projection Areas on a Downwards Forex Trading Trend
Since we use this Fibo projection tool to estimate forex take profit levels, how do we draw it in a downwards Forex trend?
We draw the Fibonacci projection indicator from chart point 1 to 2 to 3 as shown below. Remember we always draw this Fibonacci projection tool in direction of the trend. In the Fibonacci projection forex trading example below, can you figure what direction we have drawn it? - downwards direction.
Try and identify the difference between how we have drawn Fibonacci projection above and how Fibonacci Projection is drawn below. This time you would also have used Fibonacci projection level 100%, just where the price reached as shown on the forex trading example below. That would have been a nice forex take profit area.
Drawing Fib Projection Areas on a Downward Forex Trading Trend
From the Fibonacci projection forex trading example above, after plotting this Fibonacci projection forex trading tool there are 2 levels which are used to show the forex profit taking areas, these two Fibonacci projection forex levels are drawn as horizontal lines across the forex chart.
How Do I Analyze Fibo Projection Zones on Forex Charts?
