How to Trade Retracement on Upwards Stock Trading Trend
How Do You Draw Stocks Fib Retracement for Stocks Trading Uptrend?
The Fibonacci retracement indicator is placed on a stock chart in an upward stock trending market and this Stock Trading Fibonacci Retracement indicator then calculates the retracement levels for the stock upward 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 price is moving up between chart point 1 and chart point 2 then after chart point 2 it retraces down to 50.0% retracement level then stocks price continues moving up in the original upward stocks trend. Note that this stock trading Fibonacci retracement technical indicator is drawn from point 1 to point 2 in direction of the Stock trend (Upward Direction).
Because we know this is just a retracement based on our stock chart stock trend - using this Fibonacci retracement indicator, we put a buy order just between the levels 38.2% and 50.0% retracement levels and our stop loss just below 61.8% retracement level. If you had put a buy at this point in the trade example illustrated and explained below you would have made a lot of pips after the stocks price retracement reached the Fibonacci 50.0% level and then continued moving in the original upward stocks trend.
How to Trade Stock Price Retracement on Upwards Stock Trend - Stock Fibo Retracement Levels Trading
Explanation for the Above Stock Fib Retracement Strategy Examples
Once the stocks price hit the 50.0% Fibonacci retracement level, this retracement level provided a lot of support for the stock price, and afterwards stocks market then resumed the original upward stock trend & continued to move up.
23.6% Fibonacci retracement level provides minimum support & is not an ideal place to set a stock order.
38.2% Fibonacci retracement level provides some support but stocks price in this example continued to retrace upto the 50% zone.
50.0% Fibo retracement level provides a lot of support & in this example, this was the ideal place to set a buy stock order.
For this Stock Trading Retracement Strategy example, the stocks price retracement reached the 50.0% Fibonacci retracement level, but most of the time the stocks market will retrace up to 38.2% Fibonacci retracement level and therefore most of the time stock traders set their buy limit stock orders at the 38.2% Fibonacci retracement level, while at the same time placing a stop just below 61.8% Fibonacci retracement level.
