How to Predict the Price of Stocks
In today's volatile market there lies enormous opportunity for stock traders who have mastered the fundamentals of predicting the price of stocks with fibonacci numbers. Stocks that are in a strong trend upward will often pull back slightly before resuming their strong trend. Using fibonacci numbers to measure that pullback gives smart traders both good entry points and good points to measure where price is likely to go before pulling back again.
Other People Are Reading
Instructions
-
Fibonacci Numbers and Price Projections
-
1
Go to a computer with Internet access and then log on to Yahoo Finance. Once you're at Yahoo Finance begin to scroll down the list of stocks that make up the S&P 500.
-
2
Try to spot a stock that is in a strong upward trend. You can spot a trend by noticing any stock's price action beginning from the bottom left-hand corner of the stock chart and moving toward the top right-hand corner of the stock chart.
-
-
3
Mark down any stock that has been trending upward but is now pulling back in price action. Measure the price movement once you've spotted an upward trending stock. Then, take note of the .382 fibonacci retracement. For example, if you spot ABC stock trending upward from $50 to $80, that is a 30-point measure of the stock's price action. You multiply that 30-point move by the .382 fibonacci retracement, arriving at a total of 11.46 points, which you will round off to 11 points for simplicity.
-
4
Subtract the .382 fibonacci retracement total from the measure of the price move. Again, using the above example, you would take ABC stock's price high of $80 and subtract 11 points, which will give you a .382 fibonacci retracement level of $69.
-
5
Assuming that ABC stock pulls back no lower than the $69 retracement level, you then add the original 30 point-price action measure to the $69 fibonacci retracement level to predict the price of the stock, which would be $99.
-
1
Tips & Warnings
This is a powerful method of predicting the price of stocks and is amazingly accurate. One of the reasons that it is so effective is that so many traders watch these fibonacci retracement and price projection levels that they become almost self-fulfilling prophecies. Because of that predictability, they can be exploited over and over again by a skilled trader.
The price targets set by fibonacci price projections are approximations, not set points. Always use risk control because all stocks and all markets are unpredictable.
