How to Oil Trade With Fibonacci Projection - Fibonacci Projection Strategy using Fibonacci Projection Levels
What is Fib Projection in Oil Trading?
Fibonacci projection is drawn using Three chart points.
To draw Fib Projection levels we wait until the crude oil price retracement is complete and the crude oil price starts to move in original direction of the Oil Trading trend. Where the retracement reaches is used as chart point 3.
The Fibonacci projection example explained below shows the 3 Chart Points where the Fibonacci projection indicator is drawn, marked as Chart point 1, 2 and 3. Chart point 1 is where the oil trend started, Chart point 2 is where the oil trend pulled back and retraced & Chart point 3 is where the oil retracement reached as shown on the Fib Projection Tool example explained below.
Oil Trade With Fibonacci Projection? Fibonacci Projection Strategy using Fibonacci Projection Areas
Please note where these Fib Projection levels are plotted - Fibo Projection zones are plotted above the Fibonacci Indicator, these are points where the trader will place the take-profit orders using these Fib Projection Levels - 61.8% & 100% Fib Projection Zones.
Drawing Fib Projection Zones on an Upward Oil Trading Trend
We use Fibonacci projection levels to estimate where the oil trend movement will reach. There are 2 important Fibonacci projection levels: 61.8% and 100% Fibonacci Projection Levels, these are used for taking profit.
On the Fibonacci projection example explained below you can see that the Fibonacci projection technical indicator is drawn along the direction of the oil trend, since the oil trend is upward - the Fibonacci projection is drawn upward.
These Fib projection levels are displayed as horizontal lines above the Fib Projection technical indicator, showing profit taking areas. In the crude oil trading example explained below if you had used of 100% Fibonacci projection you would have made nice profit from the trade setup.
Drawing Fibo Projection Zones on an Upward Oil Trend - Fibo Projection Strategies in Oil Trading
From the above Fibonacci projection examples, the upward oil trend continued and both 61.8% & 100.00% Fibonacci projection levels were all hit after which crude oil price retraced again after getting to the 100.00% Fibo Projection level.
Drawing Fib Projection Levels on a Downwards Oil Trading Trend
Since we use this Fib projection tool to estimate take profit levels, how do we draw it in a downwards Oil Trading trend?
We draw the Fibonacci projection indicator from chart point 1 to 2 to 3 as shown below. Remember we always plot this Fibonacci projection tool in the direction of the oil trend. In the Fibonacci projection example explained below, can you figure what direction we have drawn it? That is right - downwards direction.
Try & spot the difference between how we have drawn Fibonacci projection above and how Fibonacci Projection is drawn below. This time you would also have used Fibonacci projection level 100%, just where the crude oil price reached as illustrated on the crude oil trading example explained below. That would have been a nice take profit area.
Drawing Fib Projection Levels on a Downward Oil Trend - Fibo Projection Strategies in Oil Trading
From the Fibonacci projection example above, after drawing this Fibonacci projection tool there are 2 levels that are used to show the profit-taking areas, these two Fibonacci projection levels are drawn as horizontal lines across the crude oil price chart.
