Nifty- Pivot & Fib. Res. Level

Dear members,

Find pivot & Fib levels plotted in Nifty charts at the following links: http://www.savefile.com/files/6109015 &
http://www.savefile.com/files/2991320
showing possible resistance by Pivot & fibonacci Ext. levels.

Kindly download the JPEG charts before reading the following.

Pivot levels ( considering Weekly H,L & C from Sept 1994 & Jan 1997) in Nifty 2000 Shows that nifty toped at mid point of R2 & R3. And also note that Fib Ext. levels (considering weekly H & L from Sept 1994 & Jan 1997) shows that Fib. & Pivot levels have been close by & fibonacci Ext. is to the extent of 162%

Now compare Nifty 2000 chart with Nifty2005 chart (Considering H, L, & C from the all time from 2000 to the low following the crash.) they show similarities ie. Fib ext level 162% & pivot level mR2 (ie. mid point of R2 & R3) are close by.

In Nifty2005 chart i have also plotted Fib ext. levels for Hi & Lo of year 2004. Fib. 162% again meets at the same levels.

Regards,
4candles


[note: this is not an intention to predict the market nor to scare any body, the market will take its own course. I have only posted what i have seen in the charts, so that we can be cautious untill a clear trend emerges]

How and what do we interpret? I could not gather?

Regards

Alok

Hi Alokdaga,

I think that 4candles have done excellent job by posting these two charts. The fibonacci resistance level can't be ignored. There is a great probability that the market will change its course at these levels, and there are even greater probabilities that the market will pause at these numbers.

If market continues pass these resistance numbers, than it is definitely a bull market of much longer duration.

I will say that the market will turn and will change its direction at these levels. That is just me.

Wastej

In any financial market whenever prices reach certain point or level there is usually huge supply or demand around those levels. These are known as support & resistance or over brought & oversold zones. In a rising market traders ideally book profits or short at prices which is difficult to cross these are known as Resistance levels. Similarly in a falling market traders ideally buy or go long at prices which is difficult to cross, these are known as Support levels. There are hundreds of indicators & tools which are used to calculate & arrive at these levels. Depending on their rate of success, Traders zero-in on two or more such tools to make their decisions. Now, based on choice of investment period, these tools are applied on multiple time-frames like daily, weekly, yearly & so forth. In a SHORTER time frame ie., intra, weekly, etc. different tools indicate different support & resistance price levels, in other words there is fairly a greater degree of variance of the results from one indicator to other, hence indicators giving similar signals usually succeed (hence the reason for using more than one indicator tools). Now in a LARGER time-frame most (not all) of the indicators usually tend to arrive, more or less, at the same result. In other words there is usually a lesser degree of variance in the results from one indicator to other, since it is a larger time frame.

What i did-

Pivot Points & Fibonacci Levels are two such tools used to calculate possible support & resistance levels. I have applied these two tools on those chart on a longer time frame (from the highest high to the lowest low) so that the S/R levels could be seen graphically. Now if we look at two charts closely you can see that the pivot resistance (Red lines) above R2 (marked as R2+[R2-R1]/2) which =2464 & Fib. Resistance @ 161.8 (blue lines)=2415 are very close by, same with the other chart. These are the zones where the bulls & the bears are on a fight to over come each other. So the prices/market are highly volatile at these zones.

Hope that explains, Alok.

Regards,
4candles.

Yes, Wastej you have got it right. I have elobarared a little bit though- you can read it above this post.

thanks,
4candles.