What's a Oil Trading Retracement Strategy?
How Do I Use Trading Oil Fibonacci in Oil Trading?
A good oil trading retracement strategy to use is the fibonacci retracement indicator. Fibonacci retracement indicator is used by many oil traders as a oil retracement strategy trading indicator.
The fibonacci retracement indicator is placed on a oil chart and this Oil Trading Fibonacci Retracement indicator then calculates the retracement levels on the oil charts.
Oil Trading Fib Retracement Strategy Examples on Upward Oil Trading Trend & Downwards Crude Oil Trading Trend
How to Trade Retracement on Upward Oil Trading Trend
In the Oil Trading Retracement Strategy example explained below the crude oil 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 crude oil price continues moving up in the original upward oil trend. Note that this oil retracement indicator is plotted from point 1 to point 2 in the direction of the oil trend (Upward Direction).
Because we know this is just a retracement based on our chart oil trend - using this retracement indicator, we put a buy order just between the levels 38.2% and 50.0% and our stoploss just below 61.8% pull back mark. If you had put buy at this point in the trade example explained below you would have made a lot of pips after the crude oil price retracement reached the Fibonacci 50.0% level and then continued moving in the original upward oil trend.
How to Trade Retracement on Upward Oil Trend - Oil Trading Retracement Strategy
Explanation for the Above Crude Oil Trading Retracement Strategy Examples
Once the crude oil price hit the 50.00% retracement level, this retracement level provided a lot of support for the oil price, and afterward the crude oil market then resumed the original upward oil trend and continued to move up.
23.6% retracement level provides minimum support & is not an ideal place to place a oil order.
38.20% retracement level provides some support but crude oil price in this example continued to retrace up to the 50% zone.
50.0% retracement level provides a lot of support & in this example, this was the ideal place to set a buy oil order.
For this Oil Trading Retracement Strategy example, the crude oil price retracement reached the 50.0% retracement level, but most of the time the crude oil market will retrace up to 38.2% retracement level and therefore most of the time oil traders set their buy limit oil orders at the 38.2% Fibonacci retracement level, while at the same time placing a stop just below 61.8% Fibonacci retracement level.
How to Trade Retracement on Downwards Oil Trading Trend
In the Oil Trading Retracement Strategy example explained below the crude oil market is moving down between chart point 1 & chart point 2, then after chart point 2 the crude oil price then retraces up to 38.20% retracement level then it continues heading downward in the original downward oil trend. Note that this oil retracement indicator is plotted from point 1 to point 2 in the direction of the oil trend (Downward Direction).
Because we know this is just a retracement based on the chart oil trend we put a sell order at 38.2% retracement level and a stop loss just above 61.8% retracement level.
If you had put sell order at the 38.2% retracement level as shown on the trade below you would have made a lot of pips afterwards after the crude oil price reached the 38.2% retracement level and then resumed the downward oil trend.
In this trade the retracement of crude oil price reached 38.20% retracement level and did not get to 50.00% retracement level. It is always good to use 38.2% retracement level because most times the crude oil price retracement does not always get to 50.0% retracement level.
How to Trade Retracement on Downward Oil Trend - Oil Trading Retracement Strategy
Explanation for the Above Crude Oil Trading Retracement Strategy Examples
The above Oil Trading Retracement Strategy example is a oil retracement trading setup where the crude oil price retraces immediately after touching the 38.2% Crude Oil Trading Chart Fibonacci Retracement Level.
This Oil Trading Retracement level provided a lot of resistance for the crude oil price retracement, this was the best place for a trader to place a sell limit oil order as the crude oil market quickly moved down after hitting this retracement level.
