nifty target 3700

Our markets continue their up-ward journey, correcting for only a few hours..showing great strenth..surprising so many participants,in my opinion this is a classic bottom formation,and not a SHORT TERM ,but, a MAJOR BOTTOM has been in place,,,if we look at the price pattern, its a RECTANGLE BREAK -OUT,giving projection for nifty at around 3700..i always advocate using multiple tools to identify major reversals and also to project the PROBABLE target.as one can see in the following chart , as theres a clear break-out of rectangle pattern ,formed in between 3100-2500 (a 600 p range),,which projects 3700 for nifty (3100+600= 3700).




here ,i want to show you how this rectangle tgt is supported by applying different techniques of fibonacci.first i have observed many a times that, when a significant top or bottom forms,,its last leg is retraced by 2.618% by the first leg itself of the new move.as shown on the daily chart of nifty the last leg of jan-08 top was from 5673--6354...as the bear market started ,its first leg went up-to approx 4550...now as u can see 4570 was 261.8% of the last leg of the bull rally.



now, see this chart of nifty,,,we can see that the last leg of this bear market rally was from 2967--2532,,as we put fibonacci retracements ,,3670 is the 261.8% of this last bear leg....so this projection is in line with the rectangle tgt.

One very well known use of fibonacci retracements is finding out supports-resistance using prev. tops-bottoms..as shown in this chart 4646 was a major top of the bear rally ended in may-08 ,61.8% retracement of may-08 top to october lows is at 3733..this also matches our nifty tgt of around 3700.

I have found an innovative use of fibonacci in projecting tgts ...in this case..when you see a strong move going on ,,(bull rally in our case),just take the bottom as start point of fibonacci retracement and than DRAG IT UPTO THE POINT IN FUTURE so that previous tops (which are resistances now) matches with 38.2%...50.0% and 61.8% AS IF THEY WILL BECOME SUPPORTS....a look at the attached chart will clarify my view,,the dragged point becomes our target. in our case 3658 is the projected target for nifty.12658 comes as the target for sensex.

at 3658,,,,,3230 is 38.2%....which is an imp nov top...3098 is 50.0%...which is jan-09 top of the rectangle.....2966 is the 61.8%...which is feb 09 top and also the top of the last bear rally...so using three different ways of fibonacci retracements aroound 3700 should be nifty target and also important top of the current rally.........sunny days are here again.