How Do You Read a Forex Retracement on a Downward Trend?
How Do You Trade a Forex Retracement on a Downward Trend?
The Fibonacci retracement levels tool forex indicator is placed on a forex chart in an downward forex trend and this Fibonacci retracement levels tool then calculates the forex price retracement levels for the downward forex trend on the forex chart. Fibonacci retracement levels forex trading tool is used by many traders as a forex retracement trading technical indicator.
In the Fibonacci Retracement Strategy example below the forex price is moving down between chart point 1 & chart point 2 - then after chart point 2 the forex price then retraces up to 38.2% Fibonacci retracement level and then it continues moving downwards in the original downwards trend direction. Note that this Fibonacci retracement levels indicator is drawn from chart point 1 to chart point 2 in direction of the Forex trend (Downwards Trend Direction).
Because we know this is just a forex price retracement based on the forex trend we put a forex sell order at 38.2% Fibonacci price retracement level and a stop loss order just above 61.8% Fibonacci price retracement level.
In this forex trading example the forex price retracement reached 38.2% Fibonacci price retracement level and did not get to 50.0% Fibonacci price retracement level. Many forex traders use 38.2% Fibonacci price retracement level because most times the forex price retracement does not always get to 50.0% Fibonacci price retracement level.
How Do I Read a Forex Retracement on a Downward Trend?
Explanation of FX Trading Fibonacci Retracement Strategy Example
The Fibo Retracement Strategy example above is a Fib retracement trading set up where the price retraces immediately after touching the 38.20% Fibonacci price retracement level.
38.2% Fibonacci Retracement level provided a lot of resistance for the forex price retracement - this was the best point for a trader to place a forex sell limit order as the forex price quickly moved down after hitting this 38.2% Fibonacci retracement level.
How Do I Read a Forex Retracement on a Downward Trend?
