How to Draw Oil Trading Fib Projection
How Do I Use Trading Oil Fibonacci Projection Zones on Oil Trading Chart?
We use Fibonacci Projection levels to estimate where the oil trend movement will reach. There are 2 important Fibo Projection levels: 61.8% & 100% Fib Projection Levels, these are used for profit taking.
To draw Fib Projection levels on the oil chart 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 crude oil price retracement reaches is used as chart point 3. Fibo Projection Technical Indicator is drawn using 3 chart points as shown and illustrated on the crude oil trading example explained below of how to draw the Fibonacci Projection Indicator Tool.
The Fibonacci Projection example explained below shows the 3 Chart Points where the Fibonacci Projection indicator is plotted, marked as Chart point 1, Chart point 2 & Chart point 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 Technical Indicator Tool example explained below.
How to Trade With Fibonacci Projection - How to Draw Fibonacci Projection Zones on Oil Trading Charts
Please note where these Fibonacci Projection levels are drawn - Fibo Projection zones are plotted above the Fibo indicator, these are the chart points where a trader will place the take-profit orders using these Fib Projection Levels - 61.80% and 100.00% Fibonacci Projection Levels.
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%Fibonacci Projection Level and 100% Fibonacci Projection Level, these Fibonacci Projection Levels are used for taking profit.
On the Fibonacci Projection technical indicator 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 technical indicator is drawn upwards.
These Fibo Projection levels are displayed as horizontal lines above the Fibo Projection technical indicator, showing profit taking areas. In the crude oil trading example explained below if you had used of 100.0% Fibonacci Projection level you would have made nice profit from the trade setup.
Drawing Fibo Projection Indicator on an Upward Oil Trend - Fib Projection Tool
From the above Fibonacci Projection technical indicator examples, the upwards 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 100.0% Fibo Projection level.
Drawing Fib Projection Levels on a Downwards Oil Trading Trend
Since we use the Fib Projection technical indicator to estimate take profit levels, how do we draw Fibonacci Projection in a downward Oil Trading trend?
We draw the Fibo Projection technical indicator from chart point 1 to chart point 2 to chart point Three as shown and illustrated on the crude oil trading example explained 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 plotted it? That's right - downward direction.
Try & spot 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 crude oil price reached as illustrated on the crude oil trading example explained below. That would have been a good take profit area.
Drawing Fibo Projection Indicator on a Downward Oil Trend - Fib Projection Tool
From the Fibonacci Projection technical indicator 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 plotted as horizontal lines across the crude oil price trading chart marked as 61.80%Fibonacci Projection Level & 100% Fibo Projection Level.
