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Price range = (Price * volatility * square root of day) /square root of 365

Example: Now nifty future of September 2015 expiry last recorded trade is 7785, yearly volatility of nifty is 15.6% .we are going to find the weekly trend hence days will be 7 calendar days

Price range = 0.156*7785*sqrt(7)/sqrt(365)=168.18

Example:

1SD Price Range | 168.1844 | ||
---|---|---|---|

LTP | 7851 | ||

Trend Expectation as per Fibonacci | |||

0.236 | 39.69048 | 7824.69 | 7745.31 |

0.382 | 64.24476 | 7849.245 | 7720.755 |

0.5 | 84.09 | 7869.09 | 7700.91 |

0.618 | 103.93524 | 7888.935 | 7681.065 |

0.786 | 132.18948 | 7917.189 | 7652.811 |

0.888 | 149.34384 | 7934.344 | 7635.656 |

1.236 | 207.87048 | 7992.87 | 7577.13 |

1.618 | 272.11524 | 8057.115 | 7512.885 |

Trend expectation as per volatility: Uptrend conformation 7825, successful cross over above 7869 will target 7889-7934-8057. Down trend conformation 7743 successful fall below 7701 will trigger fall till 7681-7635-7513.

Range bound trend identification: Uptrend conformation 7825, successful cross over above 7869 will target 7889-7934-8057. Down trend conformation 7743 successful fall below 7701 will trigger fall till 7681-7635-7513.

a. Buying above 7827 with initial stop loss of 7743 for initial target 7895 or selling future below 7743 with stop loss 7827 for target 7674 is advisable. These levels are weekly levels and not to be used for intraday. Similar calculation you can do for intraday with daily volatility.

Example: Now nifty future of September 2015 expiry last recorded trade is 7785, yearly volatility of nifty is 15.6% .we are going to find the intraday trend hence days will be 1 calendar days.

Price range = 0.156*7785*sqrt(1)/sqrt(365)=63.56

1SD Price Range | 63.56774 | ||
---|---|---|---|

LTP | 7785 | ||

Trend Expectation as per Fibonacci | |||

0.236 | 15.00198704 | 7800.002 | 7769.998 |

0.382 | 24.28287733 | 7809.283 | 7760.717 |

0.5 | 31.78387085 | 7816.784 | 7753.216 |

0.618 | 39.28486437 | 7824.285 | 7745.715 |

0.786 | 49.96424498 | 7834.964 | 7735.036 |

0.888 | 56.44815463 | 7841.448 | 7728.552 |

1.236 | 78.56972874 | 7863.57 | 7706.43 |

1.618 | 102.8526061 | 7887.853 | 7682.147 |

Trend expectation as per volatility: Uptrend conformation 7800, successful cross over above 7824 will target 7841-7863-7887. Down trend conformation 7770 successful fall below 7745 will trigger fall till 7729-7706-7782

Range bound trend identification: if all up move invites sale above 7825 and all down move invites short covering at 7745 level this indication is sufficient to conclude that the price action is in the range of 7825 to 7745. This is the Fibonacci 0.618 trade level

What trade decision one trader should take?

Buying above 7800 with initial stop loss of 7770 for initial target 7825 or selling future below 7770 with stop loss 7800 for target 7746 is advisable. One can use the trailing stop loss method or options to hedge the profit once the target achieved

This method is improvised by us in our paid software by adding the Fibonacci cluster (i.e. the strongest resistance and support generated by multiple Fibonacci lines). We have also taken the gap up or gap down opening factor and real time volatility to improve its success in intraday and positional trade.

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