How to Commodities Trade With Fibonacci Projection - Commodity Fibonacci Projection Strategy using Fibo Projection Levels
What is Fib Projection in Commodities?
Fibo projection is drawn using 3 chart points.
To draw Fib Projection levels we wait until the commodities price retracement is complete & the commodities price starts to move in original direction of the Commodities trend. Where the retracement reaches is used as chart point 3.
The Fibonacci projection example illustrated and explained below shows the 3 Chart Points where the Fibonacci projection indicator is drawn, marked as Chart point 1, 2 and 3. Chart point 1 is where the commodity trend started, Chart point 2 is where the commodity trend pulled back & retraced and Chart point 3 is where the commodity retracement reached as shown on the Fib Projection Tool examples illustrated & described below.
Commodities Trade With Fibonacci Projection? - Commodity Fibonacci Projection Strategy using Fibo Projection Levels
Please note where these Fib Projection areas are plotted - Fibonacci Projection zones are drawn above the Fibonacci Technical Indicator, these are the points where the trader will set the takeprofit orders using these Fib Projection Levels - 61.80% and 100% Fibonacci Projection Areas.
Drawing Fibonacci Projection Zones on an Upward Commodity Trend
We use Fibo projection levels to estimate where the commodity trend movement will reach. There are Two important Fibonacci projection levels: 61.8% and 100% Fibonacci Projection Areas, these are used for taking profit.
On the Fibonacci projection example illustrated and explained below you can see that the Fibonacci projection technical indicator is plotted along the direction of the commodity trend, since the commodity trend is upward - the Fibonacci projection is drawn upward.
These Fib projection areas are shown as horizontal lines above the Fib Projection technical indicator, showing profit taking areas. In the commodity example illustrated and explained below if you had used of 100% Fibonacci projection you would have made nice profit from the trade set-up.
Drawing Fibonacci Projection Zones on an Upward Commodities Trend - Fibonacci Projection Strategies in Commodity Trading
From the above Fibonacci projection examples, the upward commodity trend continued & both 61.80% and 100.00% Fibonacci projection levels were all hit after which commodities price retraced again after getting to the 100.00% Fibonacci Projection level.
Drawing Fibonacci Projection Areas on a Downward Commodity Trend
Since we use this Fib projection tool to estimate take profit levels, how do we draw it in a downwards Commodities trend?
We draw the Fibonacci projection indicator from chart point 1 to 2 to 3 as shown below. Remember we always draw this Fibonacci projection tool in direction of the commodities trend. In the Fibonacci projection example illustrated and explained below, can you figure what direction we have drawn it? That is right - downwards direction.
Try & identify the difference between how we have plotted Fibonacci projection above and how Fibonacci Projection is drawn below. This time you would also have used Fibonacci projection level 100%, just where the commodities price reached as shown on the commodity example illustrated and explained below. That would have been a nice take profit area.
Drawing Fib Projection Areas on a Downwards Commodities Trend - Fibonacci Projection Strategies in Commodity Trading
From the Fibonacci projection example above, after plotting this Fibonacci projection tool there are 2 levels that are used to show the profit taking areas, these two Fibonacci projection levels are drawn as horizontal lines across the commodities price chart.
