How to Draw Fibonacci Gold Trading Projection Indicator
How Do I Use Fibonacci Projection Zones on XAUUSD Chart?
We use Fibonacci Projection levels to estimate where the market trend movement will reach. There are Two important Fib Projection levels: 61.80% & 100% Fibonacci Projection Levels, these are used for profit taking.
To plot Fibonacci Projection zones on the gold chart we wait until the xauusd price retracement is complete & the price starts to move in original direction of the Gold trend. Where the xauusd price retracement reaches is used as chart point 3. Fibonacci Projection Technical Indicator is drawn using Three chart points as shown and illustrated on the xauusd examples illustrated and described below of how to draw the Fibonacci Projection Indicator Tool.
The Fibonacci Projection example described below shows the Three Chart Points where the Fibonacci Projection technical indicator is drawn, marked as Chart point 1, Chart point 2 & Chart point 3.
Chart point 1 is where the gold trend started, Chart point 2 is where the gold trend pulled back & retraced and Chart point 3 is where the gold retracement reached as displayed on the Fibonacci Projection Technical Indicator Tool example illustrated & explained below.
How to Trade with Fibonacci Projection? - How to Draw Fibonacci Projection Zones on Gold Charts
Please note where these Fibonacci Projection levels are plotted - Fibonacci Projection levels are plotted above Fibonacci technical indicator, these are the chart points where a trader will set the take profit orders using these Fib Projection Levels - 61.80% & 100.00% Fibo Projection Zones.
Drawing Fibonacci Projection Zones on an Upwards Gold Trend
We use Fibo Projection levels to estimate where the market trend movement will reach. There are Two important Fibonacci Projection levels: 61.8%Fibonacci Projection Level and 100% Fibonacci Projection Level, these Fibonacci Projection Levels are used for taking profit.
On the Fibonacci Projection technical indicator example illustrated and explained below you can see that the Fibonacci Projection technical indicator tool is drawn along the direction of the trend, since the trend is upwards - the Fibonacci Projection technical indicator is drawn upward.
These Fibonacci Projection levels are displayed as horizontal lines above Fibonacci Projection technical indicator, showing profit taking areas. In the xauusd trading examples illustrated and explained below if you had used the 100.00% Fibo Projection level the you would have made nice profit from the trade setup.
Drawing Fibonacci Projection Indicator on an Upwards Gold Trend - Fibonacci Projection Tool
From the above Fibonacci Projection technical indicator example, the upward trend continued & both 61.80% and 100.00% Fibonacci Projection levels were all hit after which xauusd price retraced again after getting to the 100.00% Fibonacci Projection level.
Drawing Fibonacci Projection Levels on a Downwards Gold Trend
Since we use the Fib Projection technical indicator tool to estimate take profit levels, how do we draw Fibo Projection in a downwards Gold trend?
We draw the Fibonacci Projection technical indicator from chart point 1 to chart point 2 to chart point Three as shown and illustrated on xauusd example illustrated & explained below. Remember we always draw this Fibonacci Projection tool in the direction of the trend. In the Fibonacci Projection example illustrated and explained below, can you figure what direction we have drawn it? That's right - downward direction.
Try and spot the difference between how we have plotted Fibonacci Projection technical indicator above and how Fibonacci Projection technical indicator is drawn below. This time you would also have used Fibonacci Projection level 100.0%, just where the price reached as shown on the xauusd example illustrated & described below. That would have been a good take profit area.
Drawing Fibonacci Projection Indicator on a Downwards Gold Trend - Fibonacci Projection Tool
From the Fibonacci Projection technical indicator example above, after drawing this Fibonacci Projection tool there are 2 levels that are used to show the profit-taking areas, these two Fibonacci Projection levels are plotted as horizontal lines across the xauusd price chart marked as 61.8%Fibo Projection Level and 100% Fibonacci Projection Level.
