How to Draw Fibonacci Gold Projection Indicator
How Do I Use Fibonacci Projection Zones in Chart?
Fibonacci projections help guess a trend's end point. Key levels include 61.8% and 100%. Traders take profits there.
To plot Fibonacci Projection areas on the chart we wait til the price retracement is complete & price begins to head in original and initial direction of trend. Where the price retracement reaches is used as point 3. Fibonacci Projection Indicator is drawn using Three chart points like as shown & displayed on the illustrations shown & described below of how to draw the Fib Projection IndicatorTool.
The Fibonacci Projection example below illustrates how the indicator plots three key points: labeled as Point 1, Chart Point 2, and Chart Point 3.
Point 1 is where trend started, Point 2 is where trend pulled back & retraced & Chart point 3 is where the market retracement reached just as displayed on the Fibonacci Projection Indicator example illustration depicted and described below.
How to Execute Trades Based on Fibonacci Projections? - Techniques for Drawing Fibonacci Projection Zones on Trading Charts
Remember where these Fibonacci Projection levels are located. These are the chart locations where a gold trader will use these Fib Projection Levels - the 61. 80% and 100. 00% Fib Projection Zones - to set their take-profits. Fibonacci Projection levels are drawn above the Fibonacci technical indicator.
Drawing Fib Projection Zones on an Upwards Trend
We employ Fibonacci Projection levels to attempt to predict where the trend movement will go and stop. The two most important Fibonacci Projection levels are the 100% Fibonacci Projection Level and the 61. 8% Fibonacci Projection Level, which are utilized for securing profits.
The Fibonacci Projection indicator, as shown and explained below, is applied in the direction of the trend. In this case, since the trend is upward, the Fib Projection indicator is drawn moving upward.
These Fib Projection levels are displayed as horizontal lines above Fibonacci Projection technical indicator, showing profit taking zones. In the examples shown/illustrated & explained below if you had used the 100.00 percent Fibonacci Projection level the you'd have earned nice profit from the Gold trade setup.
Plotting the Fibonacci Projection Indicator on a Rising Trend - Utilizing the Fibonacci Projection Tool
From the example above using the Fibonacci Projection indicator, the price continued to rise, hitting both the 61.80% and 100.00% Fibonacci Projection levels, after which the price of XAUUSD gold fell back after reaching the 100.0% Fibonacci Projection level.
Drawing Fibonacci Projection Levels on a Down-wards Trend
Since we use Fib Projection to guess where to take profits, how do we draw Fib Projection when the trend is going down?
We draw the Fibonacci Projection indicator from chart point 1 to chart point 2 to chart point Three just as is shown & illustrated in exemplification depicted & explained below. Remember we always draw this Fibonacci Projection tool in the direction of the market trend. In the Fibonacci Projection exemplification depicted and explained below, can you figure what direction we've drawn it? That's right - downwards direction.
Examine the differences between the Fibonacci Projection indicators illustrated above and below. In this instance, you would utilize a Fibonacci Projection area of 100.0%, exactly where the price reached, as depicted in the accompanying example. This would represent a good take-profit level.
Applying the Fibonacci Projection Indicator within a Declining Trend Scenario - Utilizing the Fibonacci Projection Tool
Based on the Fibonacci Projection indicator illustration above, after drawing this tool, two specific levels are utilized to designate profit-taking zones: these two Fibonacci Projection levels are rendered as horizontal lines across the price chart, labeled as the 61.8% Fib Projection Level and the 100% Fib Projection Level.
Study More Topics and Lessons:
- Which are the Best Gold Analysis Indicators?
- Gold RSI 50 Center Line Cross-over XAUUSD Method
- Method of How to Save a Work-Space or Trading Strategy on Gold Software
- How Do You Set Buy Stop Order in MT4 Software/Platform?
- How Do I Use Buy Stop XAUUSD Order on MetaTrader 4 Software/Platform?
