How to Trade Retracement on Downwards XAUUSD Trend
How Do You Draw Fibonacci Retracement for XAUUSD Downtrend?
The fibonacci retracement indicator is placed on a xauusd chart in an downward xauusd trending market and this Fibonacci Retracement indicator then calculates the retracement levels for the downward trend on the gold charts. Fibonacci retracement levels indicator is used by many traders as a xauusd retracement indicator.
In the XAUUSD Retracement Strategy example shown below the xauusd market is heading down between chart point 1 & chart point 2, then after chart point 2 the gold price then retraces up to 38.2% retracement level then it continues moving downwards in the original downward trend. Note that this Fibonacci retracement indicator is plotted from point 1 to point 2 in the direction of the trend (Downward Direction).
Because we know this is just a retracement based on the gold chart xauusd trend we put a sell order at 38.2% Fibonacci retracement level and a stop loss just above 61.8% Fibonacci retracement level.
If you had put a sell order at the 38.2% Fibonacci retracement level as shown on the xauusd trade below you would have made a lot of pips afterwards after the price reached the 38.2% Fibonacci retracement level and then resumed the downward gold trend.
In this trade the retracement of gold price reached 38.20% Fibonacci retracement level & did not get to 50.00% Fibonacci retracement level. It is always good to use 38.2% Fibo retracement level because most times the gold price retracement doesn't always get to 50.00% Fibonacci retracement level.
How to Trade XAUUSD Price Retracement on Downward XAUUSD Trend - Fibonacci Retracement Levels on XAUUSD Chart
Explanation for the Above Gold Fib Retracement Strategy Examples
The above Fibonacci Retracement Strategy examples is a xauusd retracement trading set up where the price retraces immediately after touching the 38.20% Fibonacci Retracement Level.
This Fibonacci Retracement level provided a lot of resistance for the gold price retracement, this was the best place for a trader to set a sell limit order as a xauusd market quickly moved down after hitting this 38.2% Fibonacci retracement level.
