How to Trade Retracement on Upwards Forex Trend - Upward Trend Forex Retracement Trading Strategy

How Do You Draw Fibonacci Retracement for Forex Uptrend?

The Fibonacci retracement indicator is placed on a forex chart in an upward forex trending market and this Fibonacci Retracement indicator then calculates the retracement levels for the upward trend on the forex charts. Fibonacci retracement levels indicator is used by many traders as a forex retracement trading technical indicator.

In the Forex Retracement Strategy example below the price is moving up between chart point 1 & chart point 2 then after chart point 2 it retraces down to 50.0% retracement level then price continues moving up in original upward trend. Note that this Fibonacci retracement indicator is plotted from point 1 to point 2 in the direction of the Forex trend (Upward Direction).

Because we know this is just a retracement based on our forex chart trend - using this Fibonacci retracement indicator, we put a buy order just between the levels 38.2% and 50.0% retracement levels and our stop loss just below 61.8% retracement level. If you had put a buy at this point in the trade example below you would have made a lot of pips after the price retracement reached the Fibonacci 50.0% level and then continued moving in the original upwards trend.

How to Trade Price Retracement on Upwards Forex Trend - Fibonacci Retracement Levels Trading

Explanation for the Above Forex Fibo Retracement Strategy Examples

Once the price hit the 50.0% Fibonacci retracement level, this retracement level provided a lot of support for the price, & afterward the forex market then resumed the original upward trend & continued to move upward.

23.60% Fibonacci retracement level provides minimum support and is not an ideal place to place a forex order.

38.2% Fibonacci retracement level provides some support but price in this example continued to retrace up to the 50% zone.

50.0% Fibo retracement level provides a lot of support & in this example, this was the ideal place to set a buy forex order.

For this Forex Retracement Strategy example, the forex price retracement reached the 50.0% Fibonacci retracement level, but most of the time the market will retrace up to 38.2% Fibonacci retracement level and therefore most of the time forex traders set their buy limit orders at 38.2% Fibo retracement level, while at same time placing a stop just below 61.8% Fibo retracement level.