How to find the hourly trend of stock , commodity or future ?
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Using candle gap, it is easy to find the hourly trend of any financial instrument. Below are the simple steps.
1. Collect trailing one-hour High, low and current price information.
Example: I want to find the hourly trend for crude oil at 3:30 p.m. noon. Trailing one hour ( i.e. from 2:30 to 3:30) Crude oil made high 4292 and low 4255 last traded on 3:31 was 4290.
2.Find the candle gap – (High -Low)/High
Above formula is to calculate the candle gap.
Example: For the above crude oil data candle gap is = (4292-4255/4292)=0.008720
3.Calculate Expected price range movement for coming 1 hour by multiplying the current price with candle gap.
Example : For the above crude oil data Expected price range is = 0.008720 X 4290=37.4088
4. Hourly up and down trend calculation using Fibonacci Ratio 0.236, 0.382, 0.5, 0.618, 0.786, 0.888, 1.236, 1.618.
Example: For the above crude oil data
1ST Fibonacci price range for the above crude oil example 0.236 X 37.4088=8.8284. Same way 2nd to 6th price ranges given below.
2ND Fibonacci price range 0.382X37.4088=14.2902
3RD Fibonacci price range 0.5X37.4088= 18.7044
4TH Fibonacci price range 0.618 X37.4088=23.1186
5TH Fibonacci price range 0.786X37.4088=29.4033
6TH Fibonacci price range 0.888X37.4088=32.2190
7TH Fibonacci price ranges 1.236 X 37.4088=46.2372
8TH Fibonacci price ranges 1.618 X 37.4088=60.5274.
5. Last step to calculate the hourly up trend by adding the Fibonacci Price range with last trade price and same way down trend by subtracting Fibonacci price range from last trade price.
Crude oil hourly up trend calculation given below
Hourly Uptrend resistance one = 4290+8.83= 4298.83
Hourly Uptrend resistance two = 4290+14.29= 4304.29
Hourly Uptrend resistance three = 4290+18.70= 4308.70
Hourly Uptrend resistance four = 4290+23.12= 4313.12
Hourly Uptrend resistance five = 4290+32.22= 4322.22
Hourly Uptrend resistance six = 4290+46.24= 4336.24
Hourly Uptrend resistance seven = 4290+60.53= 4350.53
Crude oil hourly down trend calculation given below
Hourly down trend support one = 4290-8.83= 4281.17
Hourly down trend support two = 4290-14.29= 4275.71
Hourly down trend support three = 4290-18.70= 4271.30
Hourly down trend support four = 4290-23.12= 4266.89
Hourly down trend support five = 4290-32.22= 4257.78
Hourly down trend support six = 4290-46.24= 4243.76
Hourly down trend support seven = 4290-60.53= 4229.47
How to initiate buy or sell trade based on this calculation? As per Fibonacci rule price move above uptrend 2nd resistance one must buy and price fall below 2nd support one must sell. For buy entry the sell entry price will be stop loss and vice versa.