Hi, I am new to technical analysis and would like to share it with you. Can you please guide me If my conclusion is correct or not?
Please see the image below.
In this image, I have plotted Fibonacci retracement. In the MACD you can see that the current trend is upwards. And the bearish candlesticks which you can observe are retracements. So based on this image can I short sell bank nifty oct fut setting a stop 50 points above today’s price. And follow this strategy till the bank nifty reaches the 38.2% level.
Yes, fibonacci retracement says that most frequent retracements are 61.8% and 38.2%. So it might retrace till the 38.2% level. But there might be other glitches in your strategy, which you should check before trading based on its signals!
First of all, pls learn before applying any methodology any where. The glitches in your Fibo drawing , as i suppose what @leodecaps is pointing are
1 For longer time frames (Daily, weekly), referring Future Charts for support/ resistance is not correct bcoz to find a history of support/ resistance, you need to look back longer n longer and Future charts doesn’t provide this longer history.
2. Fibo levels are drawn between last swing high/ low not on one or two reverse candles which is not in your case.
3. Attached my chart to find some of your glithes and self study. Decode if you can.
Trace the Fibonacci from the swing bottom to the first swing high. This forms one part of a wave form in an Elliot wave. [there are multiple wave forms and patterns so read up on them to figure out what wave this could be]
So in the referenced chart you would have the first levels from the base of the pattern to the first correction.
The MACD signals a correction / down trend when the MACD Line crosses under the signal line.
It’s generally considered bullish when the lines are above 0 and bearish under 0. In your image the lines have not crossed (confirming the correction).
Basically, imho the only trade you should be taking if you’re taking a trade in that position is to add to an existing long position. This is in the context of the image you have given and not in relation to Bank Nifty as a whole.
