Downward Indices Trend Retracement Technical Indicator Strategy
How Do I Draw Fibonacci Retracement for Indices Downtrend?
The fibonacci retracement indicator is placed on a stock indices chart in an downward indices trending market and this Fibonacci Retracement indicator then calculates the retracement levels for the downward indices trend on the stock indices charts. Fibonacci retracement levels stock indices indicator is used by many traders as a indices trading retracement trading technical indicator.
In the Indices Retracement Strategy example explained and illustrated below the stock indices trading market is heading down between chart point 1 and chart point 2, then after chart point 2 the stock indices trading price then retraces up to 38.2% retracement level then it continues moving downward in original downward trend. Note that this Fibonacci retracement indicator is drawn from point 1 to point 2 in direction of the trend (Downward Direction).
Because we know this is just a retracement based on the chart indices 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 indices trade below you would have made a lot of pips afterwards after the stock indices trading price reached the 38.2% Fibonacci retracement level and then resumed the downward indices trend.
In this trade the retracement of stock indices trading price reached 38.2% Fibonacci retracement level and did not get to 50.00% Fibonacci retracement level. It is always good to use 38.20% Fibonacci retracement level because most times the stock indices trading price retracement does not always get to 50.00% Fibonacci retracement level.
Fibonacci Retracement Areas on Indices Chart
Explanation for the Above Indices Fibo Retracement Strategy Example
The above Fibonacci Retracement Strategy examples is a stock indices retracement trading setup where the stock indices trading price retraces immediately after touching the 38.20% Stock Indices Chart Fibonacci Retracement Level.
This Fibonacci Retracement level provided a lot of resistance for the stock indices trading price retracement, this was the best place for a trader to set a sell limit order as the stock indices trading market quickly moved down after hitting this 38.2% Fibonacci retracement level.
