Fibonacci series has wide applications not only in natural phenomenon but even to freely traded markets.
There are series of Fibonacci projections or retracements that is applicable at any point of time but the key is to identify the important Fibo levels which are followed by that specific markets.
Nifty and Sensex both has been following Fibonacci ratio of 76.4% most of the time. Even the up move from the lows of 7540 failed to surpass the level of 76.4% retracement of the previous down move and reversed from there.
The below chart of Nifty clearly highlights the application of this principle. One should always look at cluster of evidences and not just a single parameter to derive a high conviction trade setup.
Nifty daily chart:
(Elliott wave counts are purposely removed from the above chart but is shown in actual morning daily research report – The Financial Waves short term update)
We do not use only advanced concept of technical analysis like Elliott wave to derive high conviction trade setups. It is important to rely on basic techniques like Channels, Fibonacci retracements and Indicators like RSI along with Elliott wave.
The above chart clearly shows reversal from the red channel resistance and also from Fibonacci ratio of 76.4% level. Many turned bullish when Nifty crossed above 8300 levels but we maintained our cautious stand and warned our subscribers about the upcoming reversal.
It is not very often to see Elliott wave, RSI, Channels, Fibonacci ratios and Time cycles all pointing to the same direction. But when such situation emerges it is wise to listen to the message market is giving to us and then act without any doubt. It is only then in this game of probability one can emerge as a winner provided you have the right tools that has proven track record in the past.
Over past few months movement on Nifty has been in very systematic and synchronized fashion. This happens during channelized corrections and offer excellent trading opportunities. Subscribe NOW to “The Financial Waves short term update” and get insight into crucial levels that will assist you from trading perspective. For subscription visit Pricing page or Contact US