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