Get started

Fintwit

The Perfect Fibonacci Retracement ExampleHere is a stock with good cash flows and EPS. RVNL made its previous all time high in January '21. Then, it went for a healthy correction at the end of the month. Getting retraced from the golden level of Fibonacci, then it consolidated till the 3rd quarter of the year. It skyrocketed to the new high at 44.80 in mid October. In this situation, I drew the Fibonacci Retracement from the previous low to the previous high (in an uptrend). The previous low was at 20.60 on 22 December 2020 and the previous high was at 35.55 on 11 January 2021. After that, price went for a correction to 26.55 on 28 January 2021, got retraced. After the retracement, it consolidated between 26 to 34 till 18 October 2021, here price broke out of consolidation and went for a new high at 44.80, which was our desired target. Understanding Fibonacci Levels The theory of getting the 61.8 number is pretty amazing. If we start from 0 and 1 and keep adding the prior number to get a sequence like: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233... Now, in this sequence, if we divide any number by its next number, we will always get 0.618, and if we divide 0.618 by 2, we will get 0.382. The 0.5 level is not officially a Fibonacci level, but it is a major level. So, we come up with a conclusion that 0.618 is the golden ratio, and the golden zone is between 0.5 to 0.618 (between the red lines). This zone is the main point where the price reverses back. Fun fact is, you can also find the work of golden ratio of Fibonacci in the nature too. Read more about it on Google. What should be the target after getting retraced? The target should be always between -0.382 to -0.618 levels (market with black box). And, for further more targets, one should learn Fibonacci Extension. Remember, that targets does not get hit just after getting retraced. After the retracement, price always consolidates before shooting up or down, in the direction of the Fibonacci made or in the direction of the trend. In this scenario, we are in a bullish trend.
NSE:RVNLEducation
by theTAguy
6
Get the major levels through Pitchfork like a Pro!Hey everyone, My previous education idea on Fibonacci Retracement got some good response. Today, I’m back with another education idea, explaining an awesome tool called ‘Pitchfork’. Alan Andrew, the creator of Pitchfork tool, got inspiration from Roger Babson’s action reaction lines for the idea of this epic Pitchfork tool. Likewise, Roger also got inspired from Newton’s third law of Gravity, which is action-reaction theory. So, the main root for the idea of this pitchfork tool is Sir Isaac Newton. The pitchfork looks like the gardening/agricultural tool used for picking and throwing loose material. There is a usage of median as its primary support or resistance level. There are 4 types of pitchforks, i.e., Original, Schiff, Modified Schiff and Inside. We will discuss only about Original Pitchfork today, which is used in trending markets. The other types of Pitchforks are used in consolidation or reversal or trending markets too. Comment below if you want to learn about the other types of Pitchforks too. There are few trending ways of trading the breakout of Pitchfork, i.e, Price Failure Rule, Divergence, Mini-Median Line and many more. We will not focus on them right now. Do let me know if you want to try them too. How do I trade the Pitchfork levels? Currently I’m using the Original Pitchfork (for the trending market) with the median levels: 0.5, 1, 1.5, 2. The main median line is red. 0.5 and 1.5 lines are dashed. 1 and 2 are important median lines. Let’s start with the strategy. We shall start from higher timeframe first. I’m using daily timeframe. Here is how to draw it: I started to draw the Pitchfork from the first low (marked with ‘A’) of the current trend, then you shall click on the next high (marked with ‘B’), then the next low (marked with ‘C’). Do not forget to turn on the magnet, because every pip matters while drawing the Pitchfork. Now, you will get the levels to trade. We shall go to the lower timeframes now and check if it is in the same trend till the 15mins timeframe. You have to look for few confirmations on 1 and 4 hourly timeframes before taking the trade. These confirmations may be any candlestick pattern and try confirming with any good oscillator too. Remember, in the starting of a bullish market, you should always long your first 3 or 4 swing trades. Here are some of the observations: Prices will touch these median lines before making any move in 80% of the cases. There are 20% chances that prices might not touch the median levels due to sentiments. After touching any median line, price might want to reverse or pass by the median line. For confirming the reversal, you should look for any candlestick pattern and there should be overbought or oversold situation on your oscillator too. Do not take the trade if any one of them is not present on both 1 hourly and 4 hourly timeframes. The target will be the next median line upcoming in the direction of your trade. (For swing trade) For passing by a median line, price will take a pull back on the 15 minutes timeframe after passing by a median line, in most of the cases. It will always make a wick or some engulfing or doji candles there. These candles are the confirmation that you can trail your SL or get into the trade. Trust me, it is not as easy it looks on the higher timeframe. The main game is taking entry on the lower timeframes. Try back testing this strategy before using it. Always use proper risk management. Trade Safe!
NSE:BANKNIFTY1!Education
by theTAguy
13