How to Draw Stocks Fib Projection
How Do I Use Fibonacci Projection Zones on Stocks Chart?
We use Fibo Projection levels to estimate where the market trend movement will reach. There are 2 important Fibo Projection levels: 61.8% & 100% Fibo Projection Levels, these are used for profit taking.
To draw Fib Projection levels on the stock chart we wait until the stocks price retracement is complete and the price starts to move in original direction of the Stocks trend. Where the stocks price retracement reaches is used as chart point 3. Fibonacci Projection Technical Indicator is plotted using 3 chart points as shown and illustrated on the stocks example illustrated and explained below of how to plot the Fibonacci Projection Indicator Tool.
The Fibonacci Projection example illustrated & described below shows the 3 Chart Points where the Fibonacci Projection indicator is drawn, marked as Chart point 1, Chart point 2 & Chart point 3.
Chart point 1 is where the stocks trend started, Chart point 2 is where the stocks trend pulled back & retraced & Chart point 3 is where the stocks retracement reached as shown on the Fib Projection Technical Indicator Tool examples illustrated & described below.
How to Trade With Fibonacci Projection - How to Draw Fibonacci Projection Zones on Stocks Charts
Please note where these Fibonacci Projection areas are drawn - Fibo Projection zones are plotted above the Fibo technical indicator, these are the chart points where a trader will place take profit orders using these Fibo Projection Levels - 61.8% and 100.0% Fibo Projection Zones.
Drawing Fibo Projection Zones on an Upward Stock Trend
We use Fibo Projection levels to estimate where the market 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 illustrated and explained below you can see that the Fibonacci Projection technical indicator is plotted along the direction of the trend, since the 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 stocks examples illustrated & described below if you had used 100.00% Fibo Projection level you would have made a good profit from using this trading setup.
Drawing Fibo Projection Indicator on an Upward Stocks Trend - Fib Projection Trading Tool
From the above Fibonacci Projection technical indicator examples, the upwards trend continued & both 61.80% & 100.0% Fibonacci Projection levels were all hit after which stocks price retraced again after getting to the 100.0% Fibo Projection level.
Drawing Fibo Projection Areas on a Downward Stock Trend
Since we use the Fibonacci Projection technical indicator to estimate take profit levels, how do we draw Fibo Projection in a downward Stocks trend?
We draw the Fibo Projection technical indicator from chart point 1 to chart point 2 to chart point 3 as shown and illustrated on the stocks example illustrated and explained below. Remember we always draw this Fibo Projection tool in direction of the trend. In the Fibonacci Projection example illustrated and explained below, can you figure what direction we have drawn it? That's right - downward direction.
Try & 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 illustrated on the stocks example illustrated and explained below. That would have been a good take profit area.
Drawing Fibo Projection Indicator on a Downward Stocks Trend - Fib Projection Trading Tool
From the Fibonacci Projection technical indicator example above, after plotting this Fibonacci Projection tool there are two levels that are used to show the profit taking areas, these two Fibonacci Projection areas are plotted as horizontal lines across the stocks price trading chart marked as 61.80%Fibo Projection Level & 100% Fibo Projection Level.
