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Understanding Fionacci Levels to make Money

Posted By On 9/18/2009 05:31:00 PM Under

One can make money by using these Fionacci Levels and one can understand the same as the levels which are basically Support and Resistance levels generated using 5-day’s chart (i.e) 5 day’s High, Low and Close. One can use the Fibonacci calculator and can make money daily from the market. Hence Fionacci Levels are more accurate than Pivot levels which are generated using previous day’s High, Low and Close.

Generally stocks look bullish above the previous day’s High and bearish below previous day’s Low. So Previous Day’s high is the minor resistance (MIR) for the scrip and the Previous Day’s low is the minor support (MIS) for the scrip.
Stocks look strong above the 5-day’s High and weak below 5-day’s Low. So Previous 5-day’s high is the major resistance (MR) for the scrip and the 5-day’s low is the major support (MS) for the scrip.
So,
MR INDICATES MAJOR RESISTANCE- 5 DAY’S HIGH
MS INDICATES MAJOR SUPPORT- 5 DAY’S LOW
MIR INDICATES MINOR RESISTANCE- PREVIOUS DAY’S HIGH
MIS INDICATES MINOR SUPPORT- PREVIOUS DAY’S LOW
SCRIP LOOKS BULLISH ABOVE PREVIOUS DAY’S HIGH
SCRIP LOOKS STRONG ABOVE 5 DAY’S HIGH
SCRIP LOOKS BEARISH BELOW PREVIOUS DAY’S LOW
SCRIP LOOKS WEAK BELOW 5 DAY’S LOW
LTP is the Last Traded Price for the scrip

HOW TO USE IT:

For e.g. For Aban Offshore July Futures LTP is 3480 .MS is 3235 which is the major support below which the stock is extremely weak and MR is 3579 which is the major resistance above which the stock is extremely strong.
Suppose the stock currently trades at 3510, above 3512 long position can be built for the first target of 3579 and if it cuts 3579 it can go up to the second target of 3645 and the stop loss can be placed at 3473. Since the trend is sideways it becomes bullish after it cuts 3505(MIR) and becomes extremely strong after it cuts 3579(MR) levels.
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