Nifty And Fibonacci

Lets study now how Nifty reacted recently on Fibonacci ratios.

   Time taken for Analysis : Oct 2014 to Jun 2015

    Nifty rallied from 7720 odd levels to 9119 and started corrected after that.

• 23% ratio was broken easily. 
• Nifty found support at 38% rallied till 23% and again fell.
• No Support at 50%
• Support at Golden Ratio 61.8% which made Nifty rally till 23%.
• Again fell till 78.6% and recovery till 50%.
• Again fell and recovery till 38% now.

    So, clearly somehow fibonacci ratios are respected. Once we can understand power of fibonacci then we can trade once these levels are respected for next level in same direction.

     Now Lets Analyse Current fall and check why 8050-60 zone was resistance for Nifty :

   

       In current fall, Nifty fell from 8060 levels and following were the resistances:

• 50% Retracement at 8064 levels
• Previous tops at 8050-8080 range.
• Gap above 8080 range.

      More the number of resistances more risk rewarding trade becomes. Nifty has already seen 250+ points fall from that level.

      Now , Lets Analyse long term Nifty movement with Fibonacci and how trend line and Fibonacci can be used to predict moves:

    Following are the observations from above chart:

• Nifty respected 23.6% and gave small pullback.
• Made Double bottom at 7890 (38% retracement) and rally till top of trendline.
• Made one more bottom near 50% retracement and gave sharp pullback. Also tested bottom trendline.

       So when we combine multiple indicators probability of move also increases.

       So from above chart 7515 or 7480-7530 becomes major support zone for Nifty and if Nifty sees these levels post RBI policy, This can be a golden opportunity to take longs both from trading and investment prospectus. Moreover if 7480 is broken then next level  is 61.8% which is 7139 which will be very very quick. 

       Moreover, if Nifty break 8060 on Upperside then we can see smooth rally till 8250 zones.

NOTE: Above charts are shared for learning purpose only and its not a BUY/SELL call/tip.