How to Draw Fibonacci Projection
How Do You Use Oil Fibo Projection Levels on Oil Trading Chart?
We use Fibo Projection levels to estimate where the oil trend movement will reach. There are 2 important Fibo Projection levels: 61.8% and 100% Fibonacci Projection Levels, these are used for profit taking.
To draw Fibo Projection levels on crude oil chart 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 crude crude oil price retracement reaches is used as chart point 3. Fibonacci Projection Technical Indicator is drawn using three chart points as shown and illustrated on oil example displayed below of how to draw the Fibonacci Projection Indicator Tool.
The Fibo Projection examples illustrated below shows 3 Chart Points where the Fibo Projection indicator is drawn, marked as Chart point 1, Chart point 2 and Chart point 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 and illustrated on Fibonacci Projection Indicator Tool example shown and illustrated below.
How to Trade With Fibonacci Projection - How to Draw Fibonacci Projection Levels on Oil Trading Charts
Please note where these Fibo Projection levels are drawn - Fibonacci Projection levels are drawn above Fibo indicator, these are the chart points where a oil trader will set the take profit orders using these Fib Projection Levels – 61.8% & 100.0% Fibo 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%Fibonacci Projection Level and 100% Fibonacci Projection Level, these Fibonacci Projection Levels are used for taking profit.
On the Fibonacci Projection indicator 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 upwards – the Fibonacci Projection indicator is drawn upwards.
These Fibo Projection levels are displayed as horizontal lines above Fibo Projection indicator, showing profit taking areas. In the oil example shown below if you had used 100.00% Fibonacci Projection level you would have made good profit from this trade setup.
Drawing Fibonacci Projection Indicator on an Upward Oil Trend – Fib Projection Tool
From the above Fibonacci Projection indicator examples, the upwards oil trend continued & both 61.80% and 100.00% Fibonacci Projection levels were all hit after which crude crude oil price retraced again after getting to the 100.0% Fibonacci Projection level.
Drawing Fib Projection Levels on a Downward Oil Trend
Since we use the Fib Projection indicator to estimate take profit levels, how do we draw Fibo Projection in a downward Oil trend?
We draw the Fibo Projection indicator from chart point 1 to chart point 2 to chart point Three as shown and illustrated on oil examples shown below. Remember we always draw this Fibonacci Projection tool in the direction of the crude oil trend. In the Fibo Projection example shown and illustrated below, can you figure what is direction we have drawn it? That is right - downward direction.
Try and spot difference between how we have drawn Fibonacci Projection indicator above and how Fibonacci Projection indicator is drawn below. This time you would also have used Fibonacci Projection level 100.0%, just where the crude crude oil price reached as shown on the oil example shown below. That would have been a good take profit area.
Drawing Fibonacci Projection Indicator on a Downward Oil Trend – Fib Projection Tool
From the Fibonacci Projection 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 drawn as horizontal lines across the crude crude oil price chart marked as 61.8%Fibo Projection Level and 100% Fibonacci Projection Level.
