Now as we have entered into a new year,every one must be having some expectations from the markets to reach some particular levels. A bit of search showed some mind blowing numbers.Well this is from a study of Fibonacci ratios which are used for making targets for the markets in future.We have already seen some rally coming in the markets in the last four consecutive years.So theres always a hope for the markets to continue the same momentum.

This system that I am now going to put forward is a method of technical analysis based on Fibonacci Ratios which has given some considerable results in the past.Now I’ll describe the method in brief to find out the market prediction for the year ‘08.

Here the lowest monthly closing on the markets is subtracted from the highest monthly closing in a given year.This gives us the range for a particular year.Then this is multiplied with Fibonacci ratios of 0.382,0.618,1 and 1.618 to get different multiples.Then these multiples are added to the tops and subtracted from the bottoms for that year to get the targets and support levels for that particular year.

Lets understand this with an example.The highest monthly closing in ‘07 was 20286 in Dec and the lowest closing was 12938 in Feb which gives a range of 7348.Now multiplying this with the Fibonacci ratios we get 4 figures like 2807,4541,7348,11890.Then they are added to the highest monthly closing of 20286. So the possible targets for the sensex in ‘08 are 23094, 24828, 27635 and …..hold on …the upper most  target is 32177.Isn’t that amazing.

Now some proof from the past to validate this system of Fibonacci ratios to calculate the targets.

Year            Fibonacci target             Target Achieved

2004                   6938                                  6617
2005                   9584                                  9442
2006                 14645                                14035
2007                 20043                               20498

The targets so achieved can be in the range of +/- 5% accuracy levels.Coming to reality much depends upon the outlook of the economy and business in general.The US markets have also a role to play.Among concerns of slow down in US markets and subprime issues,the targets may look a bit stretched at this point of time.

But if everything moves on well and if there is stability in the Govt at center we are all set to realize the targets in the next 12 months.There are ups and downs in the markets which we saw even in 2007.The current bearish trend might upset a few investors but just remain positive.The inflation is under 5% target set by the RBI.And the Indian economy is slated to grow at 9% in the coming year.This will surely lead to heavy inflow from the FIIs and in turn the return of the bulls.

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