How Do I Stock Trade With Fibonacci Projection? - Stock Trading Fibo Projection Strategy using Fibonacci Projection Levels
What is Fib Projection in Stocks Trading?
Fibonacci projection is drawn using Three chart points.
To draw Fib Projection levels we wait until the stocks price retracement is complete and the stocks price starts to move in the original direction of the Stock trend. Where the retracement reaches is used as chart point 3.
The Fibonacci projection example illustrated and explained below shows the 3 Chart Points where the Fibonacci projection indicator is drawn, marked as Chart point 1, 2 and 3. Chart point 1 is where the stock trend started, Chart point 2 is where the stock trend pulled back & retraced and Chart point 3 is where the stock retracement reached as shown on the Fib Projection Tool examples illustrated and explained below.
Stock Trade With Fibonacci Projection? - Stock Trading Fibo Projection Strategy using Fibonacci Projection Levels
Please note where these Fib Projection areas are drawn - Fibo Projection levels are plotted above the Fibonacci Indicator, these are the points where the trader will place the takeprofit orders using these Fib Projection Levels - 61.8% & 100% Fibo Projection Zones.
Drawing Fibo Projection Levels on an Upward Stock Trend
We use Fibonacci projection levels to estimate where the stock trend movement will reach. There are Two important Fibonacci projection levels: 61.8% and 100% Fibonacci Projection Areas, these are used for taking profit.
On the Fibonacci projection example illustrated and explained below you can see that the Fibonacci projection technical indicator is plotted along the direction of the stock trend, since the stock trend is upward - the Fibonacci projection is drawn upward.
These Fib projection areas are shown as horizontal lines above the Fib Projection technical indicator, showing the profit-taking areas. In the stocks trading examples illustrated and described below if you had used the 100% Fibo projection you would have made a good profit from the trade set-up.
Drawing Fibo Projection Levels on an Upwards Stock Trading Trend - Fib Projection Strategies in Stock Trading
From the above Fibonacci projection examples, the upward stock trend continued and both 61.8% & 100.00% Fibonacci projection levels were all hit after which stocks price retraced again after hitting the 100.00% Fibo Projection level.
Drawing Fibo Projection Areas on a Downward Stock Trend
Since we use this Fib projection tool to estimate take profit levels, how do we draw it in a downwards Stock trend?
We draw the Fibonacci projection indicator from chart point 1 to 2 to 3 as shown below. Remember we always draw this Fibonacci projection tool in direction of the stocks trend. In the Fibonacci projection example illustrated and explained below, can you figure what direction we have drawn it? That is right - downwards direction.
Try & identify the difference between how we have plotted Fibonacci projection above and how Fibonacci Projection is drawn below. This time you would also have used Fibonacci projection level 100%, just where the stocks price reached as illustrated on the stocks trading examples illustrated and explained below. That would have been a nice take profit area.
Drawing Fibo Projection Areas on a Downward Stock Trading Trend
From the Fibonacci projection 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 levels are drawn as horizontal lines across the stock trading price chart.
