How Do I Gold Trade with Fibonacci Projection? Fibonacci Projection Strategy using Fibonacci Projection Levels
What is Fibonacci Projection in XAUUSD Trading?
Fibonacci projection is drawn using 3 chart points.
To draw Fibonacci Projection levels we wait until the xauusd price retracement is complete and the xauusd price starts to move in the original direction of the Gold 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 gold trend started, Chart point 2 is where the gold trend pulled back and retraced and Chart point 3 is where the gold retracement reached as shown on the Fibonacci Projection Tool example illustrated and explained below.
Gold Trade with Fibonacci Projection? Fibonacci Projection Strategy using Fibonacci Projection Levels
Please note where these Fibonacci Projection levels are drawn - Fibonacci Projection levels are drawn above the Fibonacci Indicator, these are the points where the gold trader will set the take profit orders using these Fibonacci Projection Levels - 61.8% and 100% Fibonacci Projection Levels.
Drawing Fibonacci Projection Levels on an Upward Gold Trend
We use Fibonacci projection levels to estimate where the gold trend movement will reach. There are 2 important Fibonacci projection levels; 61.8% and 100% Fibonacci Projection Levels, these are used for taking profit.
On the Fibonacci projection example illustrated and explained below you can see that the Fibonacci projection indicator is drawn along the direction of the gold trend, since the gold trend is upwards - the Fibonacci projection is drawn upwards.
These Fibonacci projection levels are displayed as horizontal lines above the Fibonacci Projection indicator, showing profit taking areas. In the xauusd trading example illustrated and explained below if you had used of 100% Fibonacci projection you would have made nice profit from the trade setup.
Drawing Fibonacci Projection Levels on an Upward Gold Trend - Fibonacci Projection Strategies in Gold Trading
From the above Fibonacci projection examples, the upward gold trend continued and both 61.8% and 100.0% Fibonacci projection levels were all hit after which xauusd price retraced again after hitting the 100.0 % Fibonacci Projection level.
Drawing Fibonacci Projection Levels on a Downward Gold Trend
Since we use this Fibonacci projection tool to estimate take profit levels, how do we draw it in a downward Gold 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 the direction of the xauusd 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 and spot the difference between how we have drawn Fibonacci projection above and how Fibonacci Projection is drawn below. This time you would also have used Fibonacci projection level 100%, just where the xauusd price reached as shown on the xauusd trading example illustrated and explained below. That would have been a nice take profit area.
Drawing Fibonacci Projection Levels on a Downward Gold Trend
From the Fibonacci projection example above, after drawing this Fibonacci projection tool there are two levels that are used to show the profit taking areas, these two Fibonacci projection levels are drawn as horizontal lines across the xauusd price chart.
