How Do You Draw Fibonacci Projection Levels?
How Do You Draw Fibonacci Projection Levels?
Forex traders use Fibonacci projection levels to estimate where the trend movement will reach. There are two commonly used Fibonacci projection levels - 61.8% Fibonacci Projection Level and 100% Fibonacci Projection Levels, these fibonacci projection levels are used for setting forex take profit levels.
To draw Fibonacci Projection areas on trading forex chart 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. Fibo Projection Trading Indicator is plotted using 3 chart points as illustrated and shown on Fibo projection trading forex example below of how to plot the Fibonacci Projection Technical Indicator Tool.
The Fibonacci projection example below shows the 3 Forex Chart Points where the Fibonacci projection trading forex technical indicator is drawn, marked as Forex Chart point 1, Forex Chart point 2 and Forex Chart point 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 forex retracement reached as illustrated and shown on Fibo Projection Technical Indicator Tool example below.
How Do You Draw Fibonacci Projection Levels?
Please note where these Fibonacci Projection areas are plotted - Fibo Projection zones are plotted above the Fibonacci trading forex indicator, these are the chart points where one will set forex take profit orders using these fib Projection Levels - 61.8% and 100.0% Fibonacci Projection Levels.
Drawing Fib Projection Zones on an Upwards Forex Trading Trend
We use Fibo expansion levels to estimate where the market trend movement will get to. There are two commonly used Fibonacci projection levels: 61.8% FX Trading Fibonacci Projection Level and 100% Fibonacci Projection Level, these Fibonacci Projection Levels are used for taking profit.
On the Fib projection trading forex indicator example below you can see that the Fibonacci projection technical indicator is plotted along the direction of the trend, since the trend is upwards - the Fibonacci projection levels trading forex indicator is drawn upward.
These Fibonacci projection levels are displayed as horizontal lines above the Fib Projection trading forex indicator, showing forex profit taking areas. In the trading forex example below if you had used of 100.0% Fibonacci projection level you would have made nice profit from the trade set-up.
Drawing Fibonacci Projection Levels Indicator on an Upward Forex Trend
From above Fibonacci projection trading forex indicator example, upward trend continued and both 61.8% & 100.0% 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 the Fibonacci projection trading indicator tool to estimate forex take profit levels, how do we draw Fibonacci Projection in a downward Forex trend?
We draw the Fibonacci projection indicator tool from chart point 1 to chart point 2 to chart point 3 as illustrated & shown on the Fibo projection trading forex example below. Remember we always draw this Fibonacci projection tool in direction of the trend. In the Fibonacci projection example below, can you figure what is direction that we have drawn it? That is right - downwards direction.
Try & identify the difference between how we have drawn Fibo projection levels trading forex indicator above and how Fibonacci Projection levels trading forex indicator is drawn below. This time you would also have used Fibonacci projection level 100.0%, just where the price reached as shown on the Fibonacci projection levels trading forex example below. This would have been a good forex take profit area.
Drawing Fibonacci Projection Levels Indicator on a Downward Forex Trend
From Fibonacci projection levels trading forex indicator example above, after plotting this Fibonacci projection levels trading forex tool there are 2 levels that are used to show the forex profit taking areas - these two Fibonacci projection levels are drawn as horizontal lines across the forex price chart marked as 61.8% FX Trading Fib Projection Level and 100% Fibo Projection Level.
How Do You Draw Fibonacci Projection Levels?
