How to Draw Stock Fib Projection on Downwards Stock Trading Trend
Drawing Fibo Projection Areas on a Downwards Stock Trend
We draw the Fibo Projection tool from chart point 1 to chart point 2 to chart point 3 as illustrated and shown on stocks trading examples illustrated and described 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's right - downward direction.
As a trader you would also have used Fibonacci Projection level 100.0%, just where the stocks price reached as illustrated on the Fibonacci Projection example illustrated and explained below. That would have been a good take profit area.
How to Draw Stock Fib Projection on Downwards Stock Trading Trend
From the Fibonacci Projection technical indicator tool example above, after plotting this Fibonacci Projection technical indicator tool there are two levels that are used to show the profit taking levels, these two Fibonacci Projection areas are plotted as horizontal lines across the stock chart marked as 61.80%Fibonacci Projection Level & 100% Fibo Projection Level.
Explanation of How to Draw Fibonacci Projection Levels on Stock Charts
We use Fibonacci Projection levels to estimate where the stock trend movement will reach. There are 2 oftenly used Fibonacci Projection levels: 61.8% Fibonacci Projection Level and 100% Fibonacci Projection Levels, these are used for setting taking profit levels.
To draw Fibonacci Projection levels on stock chart we wait until the stocks price retracement is complete and the stocks price starts to move in original direction of the Stock trend. Where the stocks price retracement reaches is used as chart point 3. Fibonacci Projection Indicator tool is drawn using three chart points as shown on the stocks example illustrated & explained below of how to plot the Fib Projection Technical Indicator Tool.
The Fibo Projection example illustrated and described below shows the Three Chart Points where the Fibonacci Projection technical indicator is drawn, marked as Chart point 1, Chart point 2 & Chart point 3.
Chart point 1 is where the stock trend started, Chart point 2 is where the stock trend pulled back and retraced & Chart point 3 is where the stock retracement reached as shown on the Fib Projection Technical Indicator Tool examples illustrated and described below.
How to Draw Fib Projection Stock Indicator on Downwards Stock Trading Trend
Please note where these Fib Projection areas are plotted - Fibonacci Projection zones are drawn above the Fibo indicator, these are the chart points where a trader will set the takeprofit orders using these Fibonacci Projection Levels - 61.8% Fibonacci Projection Level and 100.0% Fibonacci Projection Level.
