How to Oil Trade With Fibonacci Projection - Oil Fibonacci Projection Strategy using Fibo Projection Levels
What is Fib Projection in Oil?
Fibo projection is drawn using 3 chart points.
To draw Fib Projection levels we wait until the crude crude oil price retracement is complete & the crude crude oil price starts to move in the original direction of the Oil trend. Where the retracement reaches is used as chart point 3.
The Fibonacci projection example shown 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 oil trend started, Chart point 2 is where the oil trend pulled back and retraced & Chart point 3 is where the oil retracement reached as shown on the Fib Projection Tool example shown below.
Oil Trade With Fibonacci Projection? - Oil Fibonacci Projection Strategy using Fibo Projection Levels
Please note where these Fib Projection levels are drawn - Fibonacci Projection levels are drawn above the Fibonacci Indicator, these are the points where the oil trader will set the take profit orders using these Fib Projection Levels - 61.80% and 100% Fibonacci Projection Levels.
Drawing Fib Projection Levels on an Upwards Oil Trend
We use Fibo projection levels to estimate where the oil 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 shown below you can see that the Fibonacci projection indicator is drawn along the direction of the oil trend, since the oil trend is upward – the Fibonacci projection is drawn upward.
These Fib projection levels are displayed as horizontal lines above the Fib Projection indicator, showing profit taking areas. In the oil example shown 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 Oil Trend - Fibonacci Projection Strategies in Crude Oil Trading
From the above Fibonacci projection examples, the upward oil trend continued & both 61.80% and 100.00% Fibonacci projection levels were all hit after which crude crude oil price retraced again after hitting the 100.00% Fibonacci Projection level.
Drawing Fib Projection Levels on a Downward Oil Trend
Since we use this Fib projection tool to estimate take profit levels, how do we draw it in a downwards Oil 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 crude oil trend. In the Fibonacci projection example shown below, can you figure what direction we have drawn it? That is right - downwards direction.
Try and spot 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 crude crude oil price reached as shown on the oil example shown below. That would have been a nice take profit area.
Drawing Fib Projection Levels on a Downwards Oil Trend - Fibonacci Projection Strategies in Crude Oil Trading
From the Fibonacci projection 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 drawn as horizontal lines across the crude crude oil price chart.
