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