As uncertainty grips the world, especially Indian markets, the discussion gets going on what do you feel the markets will be going forward ?
Even though most of us want to believe that this is a Bull Market, but corrections such as ongoing, puts your thoughts in a dustbin and make you stand in queue with all the other pessimists.
Its easier to build negativity, then positivity.
With long term views getting changed in just a matter of weeks, Investors , traders, and all related fraternity, hoping for the bull run to sustain, but fear is gripping them tight…. very tight.
They know, that very soon, their patience and capital may start wearing out and things would begin to look awry, if it isn’t as yet.
In this confounding environment, let me try to show something, which would bring about some level of calmness in this storm, and a sense that all is not random.
Let’s begin with the basic rules of Technical Analysis, or more aptly, Market Analysis. The two most basic ingredients are Price and Volume. Like most traders or investors believe, that if the price action is suitable along with volumes then the so called pattern gets a confirmation… no rocket science here !!
However, one of the third dimension to this market dynamics is the key element. It is extremely difficult to predict it, as only a few indicators have the strength to provide insight into the Time dimension.
Generally, traders concentrate on traditional indicators, based on Price and Volume. Longer term investors rely heavily on Fundamentals. However, both leave out this important 3rd dimension, i.e. TIME.
One such indicator which aids in this is, the Fibonacci number series.
Now, let’s not get into the debate whether the Fibo series is valid or not… We will answer that maybe later… but the topic on hand is more intriguing.
For basics, the number series starts from 0 and 1, and the subsequent numbers are derived if you sum the last two numbers in the sequence. Hence the sequence would be 0,1,1,2,3,5,8,13,21,34,55…..and so on.
In one of my most amazing observations, I have happened to observe something peculiar about this numerical pattern in Indian indices. It’s the key index Nifty.
Lets get straight to the point…
From 1994 onwards, we have seen the behavior of prices and the chart below gives you an eye-view of the price movements since the last 2 decades.
Tabulating the above series of significant tops and bottoms over the last 2 decades gives us something like this:
- Nifty long term chart indicating a movement in sync with the Fibonacci numbers.
- If this is true than the major bottom for the 8 year sideways market could happen in 2016.
- It also indicates that we could be headed towards a 13- year MEGA BULL Market of our lifetimes.
- It’s not the Fibonacci numbers itself that is important, it’s the relationship between them that matters.
Tighten your seat belt friends, it could be ShowTime of our Lifetime!!.