How to Trade Retracement on Downwards Stock Trend
How Do I Draw Stocks Fibonacci Retracement for Stocks Trading Downtrend?
The fibonacci retracement indicator is placed on a stock chart in an downward stock trending market and this Stock Trading Fibonacci Retracement indicator then calculates the retracement levels for the stock downward stocks trend on the stock charts. Fibonacci retracement levels stock indicator is used by many stock traders as a stock trading retracement indicator.
In the Stock Trading Retracement Strategy example illustrated and explained below the stocks market is moving down between chart point 1 & chart point 2, then after chart point 2 the stocks price then retraces up to 38.20% retracement level then it continues heading downward in the original downward stocks trend. Note that this stock trading Fibonacci retracement indicator is drawn from point 1 to point 2 in direction of the Stock trend (Downward Direction).
Because we know this is just a retracement based on the stock chart stock 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 stock trade below you would have made a lot of pips afterwards after the stocks price reached the 38.2% Fibonacci retracement level and then resumed the downward stocks trend.
In this trade the retracement of stocks price reached 38.20% Fibonacci retracement level & did not get to 50.0% Fibonacci retracement level. It is always good to use 38.20% Fibo retracement level because most times the stocks price retracement does not always get to 50.0% Fibonacci retracement level.
How to Trade Stock Price Retracement on Downward Stock Trend - Stocks Fibonacci Retracement Levels Technical Indicator on Stocks Chart
Explanation for the Above Stock Fib Retracement Strategy Examples
The above Stock Trading Fibonacci Retracement Strategy example is a stock retracement trading setup where the stocks price retraces immediately after touching the 38.2% Stocks Chart Fibonacci Retracement Level.
This Stock Trading Fibonacci Retracement level provided a lot of resistance for the stocks price retracement, this was the best place for a trader to set a sell limit stock order as the stocks market quickly moved down after hitting this 38.2% Fibonacci retracement level.
