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