How to Draw Fib Projection - How to Draw Fibonacci Projection Indicator on Forex Charts
How Do You Use Fibonacci Projection Zones on Forex Chart?
We use Fibo Projection levels to estimate where the market trend movement will get to. There are 2 important Fibo Projection levels: 61.8% & 100% Fibo Projection Levels, these are used for taking profit.
To draw Fibo Projection levels on forex chart we wait until the price retracement is complete & the price starts to move in original direction of the Forex trend. Where the price retracement reaches is used as chart point 3. Fibonacci Projection Indicator is plotted using three chart points as illustrated & shown on example below of how to plot the Fibonacci Projection Indicator Tool.
The Fibonacci Projection example below shows the 3 Chart Points where the Fibonacci Projection technical indicator is drawn, marked as Chart point 1, Chart point 2 & Chart point 3.
Chart point 1 is where the forex trend started, Chart point 2 is where the forex trend pulled back & retraced and Chart point 3 is where the forex retracement reached as illustrated on the Fib Projection Technical Indicator Tool example below.
How to Trade with Fibonacci Projection? - How to Draw Fibonacci Projection Zones on Forex Charts
Please note where these Fibonacci Projection areas are drawn - Fibo Projection areas are plotted above Fibo indicator, these are chart points where one will set take-profit orders using these Fibo Projection Levels - 61.80% and 100.00% Fibo Projection Levels.
Drawing Fibonacci Projection Zones on an Upwards Forex Trend
We use Fibo Projection levels to estimate where the market trend movement will get to. There are 2 important Fibonacci Projection levels: 61.8% Forex Trading Fib Projection Level and 100% Fibonacci Projection Level, these Fibonacci Projection Levels are used for taking profit.
On the Fibonacci Projection technical indicator example below you can see that the Fibonacci Projection technical indicator tool is plotted along the direction of the trend, since the trend is upwards - the Fibonacci Projection technical indicator is drawn upward.
These Fibo Projection levels are displayed as horizontal lines above Fibo Projection indicator, showing profit taking areas. In the forex trading 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 Indicator on an Upwards Forex Trend - Fibonacci Projection Tool
From the above Fibonacci Projection technical indicator example, upward trend continued and both 61.8% & 100.0% Fibonacci Projection levels were all hit after which price retraced again after getting to the 100.00% Fibonacci Projection level.
Drawing Fibonacci Projection Areas on a Downwards Forex Trend
Since we use the Fib Projection technical indicator tool to estimate take profit levels, how do we draw Fibo Projection in a downwards Forex trend?
We draw the Fibo Projection technical indicator tool from chart point 1 to chart point 2 to chart point 3 as illustrated & shown on example below. Remember we always draw this Fibo Projection tool in direction of the market trend. In the Fibonacci Projection example below, can you figure what is direction that we have drawn it? That is right - downwards direction.
Try and identify the difference between how we have drawn Fibonacci Projection technical indicator above and how Fibonacci Projection technical indicator is drawn below. This time you would also have used Fibonacci Projection level 100.0%, just where the price reached as shown on example below. That would have been a good take profit area.
Drawing Fibonacci Projection Indicator on a Downwards Forex Trend - Fibonacci Projection Tool
From the Fibonacci Projection technical indicator example above, after plotting this Fibonacci Projection tool there are 2 levels that are used to show the profit taking areas, these two Fibonacci Projection levels are plotted as horizontal lines across the forex price chart marked as 61.8% Forex Fibo Projection Level & 100% Fibo Projection Level.
