Upward Indices Trend Retracement Technical Indicator Strategy

How Do I Draw Fibonacci Retracement for Stock Indices Uptrend?

The Fibonacci retracement indicator is placed on a stock indices chart in an upward indices trending market and this Fibonacci Retracement indicator then calculates the retracement levels for the upward 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 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 stock indices price continues moving up in the original upward trend. Note that this Fibonacci retracement technical indicator is plotted from point 1 to point 2 in direction of the trend (Upward Direction).

Because we know this is just a retracement based on our chart indices 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 explained and illustrated below you would have made a lot of pips after the stock indices price retracement reached the Fibonacci 50.0% level and then continued moving in the original upwards trend.

How to Trade Indices Price Retracement on Upwards Indices Trend - Fibonacci Retracement Levels Trading

Explanation for the Above Stock Indices Fibonacci Retracement Strategy Examples

Once the stock indices price hit the 50.0% Fibonacci retracement level, this retracement level provided a lot of support for the indices price, & afterward the stock indices market then resumed the original upward trend & continued to move upward.

23.60% Fibonacci retracement level provides minimum support and is not an ideal place to set a stock indices order.

38.2% Fibonacci retracement level provides some support but stock indices price in this example continued to retrace up to 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 indices order.

For this Indices Retracement Strategy example, the stock indices price retracement reached the 50.0% Fibonacci retracement level, but most of the time the stock indices trading market will retrace up to 38.2% Fibo retracement level & therefore most of the time indices traders set their buy limit orders at the 38.2% Fibo retracement level, while at same time placing a stop just below 61.8% Fibo retracement level.