How Do I Trade with Fibonacci Retracement? - Fib Retracement Strategies in Forex Trading
Fib Retracement is an indicator used in forex trading to calculate price retracement levels in an upward or a downwards trend.
Fibonacci retracement levels are used by traders to place trades and open trades at better price after price has resumed moving in the original trend direction after retracing.
What are Forex Fib Retracement Zones?
- 23.6% FX Fibo Retracement
- 38.2% Forex Fib Retracement
- 50.0% Forex Fib Retracement
- 61.8% Fib Retracement
38.20% and 50.00% Fibo Retracement Areas are most oftenly used
most of the times this is where price retracement will reach - with 38.2% Fibo Retracement Level being the most popular & most widely used retracement level in forex.
61.8% Fibonacci Retracement Level is also commonly used to set stop loss for trades opened using this retracement strategy.
What is Fibo Retracement Strategy using Fibonacci Retracement Levels?
What is Fibo Retracement Strategy using Fibonacci Retracement Levels?
Fibo Retracement Strategies in Forex Trading - Fibonacci Retracement Tool Explained
Fibo Retracement Strategies in FX Trading - Fib Retracement Tool Explained
How Do You Draw Trading Fib Retracements?
Fibo Retracement Levels tool indicator is drawn in direction of the trend as shown in the 2 Fibonacci retracement example below:.
Upwards Trend Strategy - Fib Retracement Levels Strategy
In the analysis example 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 area then price continues moving up in original upwards trend. Note that this retracement indicator is drawn from point 1 to point 2 in direction of the trend (Upwards Direction).
Fibonacci Retracement Levels - Fib Retracement in an Up Trend
Fibonacci Retracement Strategy using Fibonacci Retracement Levels in an Up Trend
Once the price hit the 50.00% retracement level, this pull back provided lots of support for price, & afterward market then resumed the original upward trend & continued to move upward.
For this Fib retracement strategy example, the price retracement reached the 50.0 % retracement level, but most of time the market will retrace up to 38.2% retracement area and therefore most of the time traders set their buy limit orders at 38.2% Fib retracement level, while at same time placing a stop just below 61.8% Fibo retracement level.
Downward Trend Strategy - Fib Retracement Strategy using Fibonacci Retracement Levels
In the Fibonacci retracement strategy example below the market is moving down-wards between chart point 1 and chart point 2, then after chart point 2 the price then retraces upto 38.2% retracement area then it continues heading downward in the original downwards trend. Note that this retracement indicator is drawn from point 1 to point 2 in direction of the trend (Downwards Direction).
Fib Retracement Levels - Fib Retracement in a Down Trend
Fibonacci Retracement Strategy using Fibonacci Retracement Levels in a Down Trend
The above Fib retracement strategy example is a retracement trading set up where the price retraces immediately after touching the 38.20% Fib Retracement Level.
In this Fibo retracement strategy examples the retracement of price reached 38.2 % retracement area & did not get to 50.0% retracement level. It is always good to use 38.20 % retracement area because most times price retracement doesn't always get to 50.00% retracement level.
This Retracement provided lots of resistance for the price pullback, this was the best place for one to set a sell limit order as a market quickly headed down after hitting this price pullback level.
