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  • Category: Finance and Investments

    How do I find support level of Nifty 50?


    Are you interested in knowing about support level for Nifty 50? Looking out for the correct formula and what to is the scenario if the last support level is broken by Nifty 50 index? Your queries will be resolved by our experts on this page.

    Currently, the stock market is facing the toughest days. The Nifty 50 index or Sensex index both are making lower levels day by day. What could be the next support level of Nifty 50? How do I calculate the support levels of Nifty 50? Is there any particular formula to be followed? What would be the scenario if last support level is broken by the Nifty 50 index?
  • Answers

    3 Answers found.
  • This level is calculated with the last trading session's open, high, low, and close values of the share of the company.
    The pivot point (PP) is the average of previous day's High value, Low value and Close value.
    PP = Low value + High Value + Low Value /3.

    The resistance and support values can be calculated by using the following formulas. Generally, three levels will be calculated but some will calculate at the mid-level.

    First level support and resistance:
    First resistance (R1) = (2 x PP) – Low of yesterday
    First support (S1) = (2 x PP) – High of yesterday

    The second level of support and resistance:
    Second resistance (R2) = PP + (High of yesterday – Low of yesterday)
    Second support (S2) = PP – (High of yesterday – Low of yesterday)

    The third level of support and resistance:
    Third resistance (R3) = High of yesterday + 2(PP – Low of yesterday)
    Third support (S3) = Low of yesterday – 2(High of yesterday – PP.

    drrao
    always confident

  • Pivot Point:
    It is valued at which a stock is at the stable form and if this level is broken then the stock can move towards the resistance level. Pivot Point is calculated using values in the last trading session.

    P=High+Low+Close/3
    H=High value of the day
    L=Low value of the day
    C=Closing value of the day
    Eg: P=9570.15+9055+9118.45/3
    P=9247, This is the pivot point of Nifty 50 calculated using last day trading session.

    Resistance:
    Resistance is a level at which a particular stock is not having enough demand and stock price resist from going upwards.
    R1=2P-L
    R2=P+H-L

    Support:
    Support is a price level at which a particular stock is having good demand and it should reach at that level to keep the stock from declining and it does not go beyond below this level.
    S1=2P-H
    S2=P-H+L
    Pivot points are short term indicators which are useful for one day at a time. It should be calculated each day using a changing price movement. Then only we can find the trend of the stock market.

    "Earning knowledge is by sharing it with ISC and we will rectify our mistakes."

  • Based on the previous trend in the share market, the future prices and their ranges are calculated by using some established formulas. Please note that these are all predictive in nature and are only a good guess based on the historical experience of the trend of these indices. So, one can use them for entering or exiting but they are not guaranteed as new trends always can emerge next day. So, next day levels would be based on the present trend and are deduced based on the previous averages.

    Generally the average of last trading day's high, low and closing are taken as the lead points or pivot point for the next day trading. From this value we can then find the probable resistance and support value for the next trading day. Resistance level is met when the market tries to climb and people start off loading their holdings for booking the profit. So, resistance level is calculated as the two time of the pivot point minus the yesterday's low value. Similarly when share values dip down there is a support level where people start to buy the shares. It is natural that support level be lower and to get that we deduct high of yesterdays value from the two times of pivot point. In the same way next resistance and support level can be calculated using the appropriate formula. Historically this mathematical formulation works at times but share market is unpredictable and new trends can always defy the earlier trends.

    Presently the macro trend in the market is bearish and we do not know when the market would bottom out. One strategy is to buy some shares at every new low till the market goes to its minimum level. Then hold it for a longer time. In these difficult times market takes time in looking up and it is no surprise that we might have to wait for a longer time for making a profit. Share market is a game of patience and waiting only till you get a good value for offloading your investments.

    Knowledge is power.


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