How to Trade Retracement on Downward Gold Trend

How Do I Draw Fibonacci Retracement for XAUUSD Downtrend?

The fibonacci retracement indicator is placed on a gold chart in an downward gold trending market and this Fibonacci Retracement indicator then calculates the retracement levels for the gold downward xauusd trend on the gold charts. Fibonacci retracement levels gold indicator is used by many gold traders as a gold trading retracement trading indicator.

In the Gold Retracement Strategy example illustrated and explained below the xauusd market is moving down between chart point 1 and chart point 2, then after chart point 2 the xauusd price then retraces up to 38.2% retracement level then it continues moving downward in the original downward xauusd trend. Note that this Fibonacci retracement indicator is drawn from point 1 to point 2 in the direction of the Gold trend (Downward Direction).

Because we know this is just a retracement based on the gold chart gold trend we put a sell order at 38.2% Fibonacci retracement level and a stop loss just above 61.8% Fibonacci retracement level.

If you had put a sell order at the 38.2% Fibonacci retracement level as shown on the gold trade below you would have made a lot of pips afterwards after the xauusd price reached the 38.2% Fibonacci retracement level and then resumed the downward xauusd trend.

In this trade the retracement of xauusd price reached 38.2% Fibonacci retracement level and did not get to 50.0% Fibonacci retracement level. It is always good to use 38.2% Fibonacci retracement level because most times the xauusd price retracement does not always get to 50.0% Fibonacci retracement level.

How to Trade Gold Price Retracement on Downward Gold Trend - Fibonacci Retracement Levels on XAUUSD Chart

Explanation for the Above Fibonacci Retracement Strategy Example

The above Fibonacci Retracement Strategy example is a gold retracement trading setup where the xauusd price retraces immediately after touching the 38.2% XAUUSD Chart Fibonacci Retracement Level.

This Fibonacci Retracement level provided a lot of resistance for the xauusd price retracement, this was the best place for a gold trader to place a sell limit gold order as the xauusd market quickly moved down after hitting this 38.2% Fibonacci retracement level.