NIFTY & BANKNIFTY OPTIONS TRADING

TECHNICAL INDICATORS
MASTER GUIDE
EMA • VWAP • RSI • Bollinger Bands • Fibonacci Retracement

EMA 9/21/50 VWAP RSI 14 Bol. Bands Fibonacci

Entry Rules • Stop Loss Placement • Target Levels • Real Chart Examples

Angel One Platform Setup for Each Indicator

5 Entry & Target Real Angel One

Indicators Stop Loss Levels NIFTY Charts Setup

Technical Indicators Master Guide | Page 1 | NIFTY & BANKNIFTY Options Trading
TABLE OF CONTENTS

# Indicator Page

1 EMA — Exponential Moving Average (9, 21, 50) 3

2 VWAP — Volume Weighted Average Price 9

3 RSI — Relative Strength Index (14) 14

4 Bollinger Bands (20, 2) 20

5 Fibonacci Retracement 26

6 Combined Indicator Strategy 32

7 Quick Reference & Cheat Sheet 34

Technical Indicators Master Guide | Page 2 | NIFTY & BANKNIFTY Options Trading
 EMA — Exponential Moving Average
1
Period: 9 (Fast) • 21 (Medium) • 50 (Slow) | The trend-following backbone

What is EMA?
The Exponential Moving Average (EMA) is a type of moving average that gives MORE weight to recent price data
compared to Simple Moving Average (SMA). Because it reacts faster to recent price changes, it is the preferred tool
of professional intraday and swing traders in NIFTY and BANKNIFTY options trading.

Formula: EMA = Price(today) × K + EMA(yesterday) × (1-K), where K = 2 ÷ (Period + 1)

EMA Period Speed Best Timeframe Primary Use Color on Chart

EMA 9 Very Fast (reactive) 1-min, 3-min, 5-min Intraday scalping, quick signals 0x00cec9

EMA 21 Medium 5-min, 15-min, Hourly Swing entries, trend confirmation #FDCB6E

EMA 50 Slow (institutional) 15-min, Daily Major trend direction, strong S/R #A29BFE

EMA Chart — NIFTY 15-min with EMA 9, 21 & 50

Live-style chart showing crossovers, support/resistance, and trade signals

NIFTY 15-min Chart — EMA 9, 21, 50 EMA 9 EMA 21 EMA 50

22720

TGT

22566

Golden Cross
22412 EMA9>EMA21

BUY CE SL
Pullback to
22258 EMA21 (Support)

22104

21950

How to Read EMA — Complete Rules

GOLDEN CROSS (Bullish Signal)

EMA 9 crosses ABOVE EMA 21

• EMA 9 moves from below EMA 21 to above it — bullish crossover

• Price should be ABOVE both EMAs to confirm bullish momentum
• If price is also above EMA 50 — VERY STRONG uptrend confirmation
• Volume should be rising on the crossover candle

Technical Indicators Master Guide | Page 3 | NIFTY & BANKNIFTY Options Trading
 DEATH CROSS (Bearish Signal)
EMA 9 crosses BELOW EMA 21

• EMA 9 moves from above EMA 21 to below — bearish crossover

• Price should be BELOW both EMAs to confirm bearish momentum
• If price is also below EMA 50 — VERY STRONG downtrend
• Volume should confirm with increased selling pressure

NIFTY 15-min — EMA Crossover Signals EMA 9 EMA 21

23200
BEARISH ZONE BULLISH ZONE
(EMA9 < EMA21) (EMA9 > EMA21)

22850

22500

22150

21800

EMA as Dynamic Support & Resistance

EMAs don't just signal crossovers — they act as moving support (in uptrends) and moving resistance (in downtrends)
throughout the trading session. When price dips to EMA 21 in an uptrend and bounces, that's a high-quality CE entry
point.

• EMA 9 support: Price dips to EMA 9 and bounces → Add to winning long positions
• EMA 21 support: Stronger bounce zone → Primary entry for CE buys in uptrend
• EMA 50 support: Strongest level → Institutional buying zone, major reversals happen here
• EMA 50 resistance: In downtrend, rallies to EMA 50 and fail → PE entry points

■■ ANGEL ONE SETUP

Angel One: Open NIFTY/BANKNIFTY Chart → Indicators → Moving Average → Exponential
EMA 9: Period=9, Color=Cyan (#00CEC9), Width=2
EMA 21: Period=21, Color=Orange (#FDCB6E), Width=2
EMA 50: Period=50, Color=Purple (#A29BFE), Width=2, Style=Dashed
Recommended Timeframes: 3-min (scalping), 15-min (swing), Daily (position trading)

Technical Indicators Master Guide | Page 4 | NIFTY & BANKNIFTY Options Trading
 ■ ENTRY / SL / TARGET RULES
BULLISH ENTRY (Buy CE):
Condition 1: EMA 9 crosses above EMA 21 (Golden Cross on your chosen TF)
Condition 2: Price is above VWAP (institutional bias is bullish)
Condition 3: RSI > 50 and rising (momentum confirming)
Entry: ATM or 1-strike OTM Call option on next candle open
Example: NIFTY at 22,450. EMA9>EMA21. Enter 22,500 CE at ■95

STOP LOSS:
Option 1: Below EMA 21 on price chart (dynamic SL — best method)
Option 2: Fixed 30-40% of premium paid (■95 → SL at ■57-■67)
Example: EMA 21 at 22,380 → Exit CE if NIFTY falls below 22,380

EXIT / TARGET:
Target 1: Next key resistance level (book 50% of position)
Target 2: When EMA 9 crosses back below EMA 21 (trail stop)
Example: Resistance at 22,650 → Book 50% CE at ■165, trail rest

■ NIFTY LIVE EXAMPLE

NIFTY 15-min Chart — Golden Cross Trade:
Time: 10:15 AM. NIFTY at 22,430
Signal: EMA 9 (22,420) crosses above EMA 21 (22,395) on 15-min chart
Confirmation: Price above VWAP (22,380), RSI = 58
Trade: Buy 22,500 CE at ■78 (Lot size 25 = Total ■1,950)
SL: If NIFTY closes below EMA 21 (22,380) → CE falls to ~■45 → Exit
Target: Resistance at 22,700 → CE = ■185 → Profit = (■185-■78)×25 = ■2,675

EMA Signal Quick Reference

Scenario EMA Relationship Signal Action

Strong Uptrend Price > EMA9 > EMA21 > EMA50 Strongly Bullish Buy CE, trail stop below EMA9

Moderate Uptrend Price > EMA9 > EMA21 Bullish Buy CE at EMA21 bounce

Golden Cross EMA9 crosses above EMA21 Bullish Entry Buy ATM CE immediately

Death Cross EMA9 crosses below EMA21 Bearish Entry Buy ATM PE immediately

Moderate Downtrend Price < EMA9 < EMA21 Bearish Buy PE at EMA21 resistance

Strong Downtrend EMA50 > EMA21 > EMA9 > Price Strongly Bearish Buy PE, trail stop above EMA9

Flat/Choppy EMA9 ≈ EMA21 (horizontal) Sideways Avoid, wait for clarity

Pullback Entry Price dips to EMA21 in uptrend Buy the dip High-probability CE entry

■■ WARNING
NEVER trade EMA crossovers alone in choppy/sideways markets — multiple false signals!
EMA works BEST in trending markets. Use RSI and VWAP to filter out sideways conditions.
EMA 50 on the 15-min chart = one of the strongest support/resistance levels for NIFTY.

Technical Indicators Master Guide | Page 5 | NIFTY & BANKNIFTY Options Trading
 VWAP — Volume Weighted Average Price
2
The institutional benchmark • Resets every day • Most important intraday level

What is VWAP?
VWAP is the average price at which ALL transactions have occurred throughout the trading day, weighted by volume.
It is calculated by dividing the total dollar/rupee value traded by the total volume. VWAP is the benchmark that
institutional traders (FIIs, mutual funds, large HNIs) use to measure their execution quality — they try to buy BELOW
VWAP and sell ABOVE VWAP.

Formula: VWAP = Cumulative (Typical Price × Volume) ÷ Cumulative Volume

Typical Price = (High + Low + Close) ÷ 3

Key fact: VWAP RESETS to zero at the start of each trading session (9:15 AM IST). It is purely an intraday indicator
— not used on daily/weekly charts.

VWAP Chart — NIFTY Intraday

Price relationship with VWAP and key trading signals throughout the day

NIFTY Intraday — VWAP Strategy VWAP Price

22750

22620
Break above VWAP ABOVE VWAP
= Bullish momentum = BULLISH
VWAP
22490 22525
BELOW VWAP = BEARISH
Price dips to VWAP
→ BUY CE here
SL
22360

22230

22100

VWAP Rules — The Complete Playbook

Market Condition VWAP Relationship Institutional Bias Options Strategy

Price > VWAP Bulls in control Institutions are net buyers Buy CE, hold CE positions

Price < VWAP Bears in control Institutions are net sellers Buy PE, hold PE positions

Price at VWAP Decision point Institutions are neutral Wait for direction

Price breaks above VWAP Bullish breakout Buying accelerating Strong CE entry signal

Price breaks below VWAP Bearish breakdown Selling accelerating Strong PE entry signal

Price bounces off VWAP VWAP as support Institutions defending level Add to CE positions

Technical Indicators Master Guide | Page 6 | NIFTY & BANKNIFTY Options Trading
Price rejected at VWAP VWAP as resistance Sellers at VWAP Add to PE positions

Multiple VWAP tests Key battleground Both sides fighting Wait — whipsaw likely

VWAP Trading Strategies for NIFTY

Strategy 1: VWAP Bounce (High Probability)

Best used in trending markets • 3-min or 5-min chart

• Step 1: Confirm the trend on 15-min chart (uptrend or downtrend)

• Step 2: Wait for price to pull back to VWAP level
• Step 3: Look for a bullish reversal candle AT VWAP (Hammer, Engulfing, Doji)
• Step 4: Enter CE when price bounces above VWAP on increasing volume
• Stop Loss: Close below VWAP line
• Target: Previous high of the day or session high

Strategy 2: VWAP Breakout

Best used when price has been ranging near VWAP

• Step 1: Price consolidating around VWAP for 30+ minutes

• Step 2: Wait for a decisive break with HIGH VOLUME (2-3x average)
• Step 3: Break ABOVE VWAP + EMA9 > EMA21 → Buy CE immediately
• Step 4: Break BELOW VWAP + EMA9 < EMA21 → Buy PE immediately
• Stop Loss: Return back through VWAP (close basis)
• Target: 1x-2x the range of the consolidation zone above VWAP

■■ ANGEL ONE SETUP

Angel One: Open NIFTY Chart → Indicators → VWAP → Apply
Color: Hot Pink (#FD79A8) or any distinctive color, Width: 2.5 (visible)
IMPORTANT: VWAP is only available on intraday charts (1-min to 1-hour)
It does NOT appear on daily/weekly charts — this is correct behavior!
Best timeframes: 3-min (scalping), 5-min (intraday), 15-min (session trading)

■ ENTRY / SL / TARGET RULES

BULLISH ENTRY at VWAP Bounce (Buy CE):
Signal: Price pulls back to VWAP in an uptrend + Bullish candle forms at VWAP
Confirm: EMA 9 > EMA 21, RSI > 50, Volume rising
Entry: Buy ATM CE at next candle open after VWAP bounce confirmed
Stop Loss: If NIFTY closes a 5-min candle BELOW VWAP (not just touches)
Example: NIFTY VWAP=22,450. Price dips to 22,445, bounces with green candle.
Buy 22,500 CE at ■85. SL: NIFTY < 22,420. Target: 22,620

BEARISH ENTRY at VWAP Rejection (Buy PE):

Signal: Price rallies to VWAP in downtrend + Bearish candle forms at VWAP
Confirm: EMA 9 < EMA 21, RSI < 50, Volume on sell side
Entry: Buy ATM PE when price is rejected back below VWAP
Stop Loss: If NIFTY closes ABOVE VWAP (invalidates the signal)
Example: NIFTY VWAP=22,600. Price rallies to 22,598, red candle forms.
Buy 22,600 PE at ■75. SL: NIFTY > 22,640. Target: 22,460

Technical Indicators Master Guide | Page 7 | NIFTY & BANKNIFTY Options Trading
■ NIFTY LIVE EXAMPLE
NIFTY Intraday VWAP Bounce Trade:
Time: 11:30 AM. NIFTY in uptrend. VWAP = 22,480
Price pulls back from 22,580 high to 22,485 (VWAP zone)
Hammer candle forms at VWAP. EMA9 > EMA21. Volume increases.
Trade: Buy 22,500 CE at ■72. Stop: NIFTY < 22,450 (below VWAP)
NIFTY bounces to 22,620 by 1:30 PM → CE = ■155
Profit: (■155-■72) × 25 = ■2,075 | Risk was: (■72-■40)×25 = ■800
Risk:Reward = 1:2.6

■■ WARNING
VWAP is an INTRADAY tool only — do not use it on daily charts (it won't work).
Never hold options overnight just because 'price is above VWAP' — VWAP resets daily.
In the first 15-30 minutes (9:15-9:45 AM), VWAP is unreliable — limited volume data.
The best VWAP signals come after 10:00 AM when enough volume has accumulated.

Technical Indicators Master Guide | Page 8 | NIFTY & BANKNIFTY Options Trading
 RSI — Relative Strength Index
3
Period: 14 • Scale: 0-100 • The momentum oscillator that never lies

What is RSI?
RSI (Relative Strength Index) was developed by J. Welles Wilder in 1978. It measures the SPEED and MAGNITUDE
of recent price changes on a scale from 0 to 100. RSI tells you whether a stock/index is OVERBOUGHT (likely to fall)
or OVERSOLD (likely to rise). For NIFTY options, RSI is used to time entries at extremes and catch reversals before
they happen.

Formula: RSI = 100 - [100 ÷ (1 + RS)], where RS = Average Gain ÷ Average Loss over the last 14 periods. RS uses
exponential smoothing after initial period.

RSI Level Zone Market Condition Options Signal

Above 80 Extreme Overbought Severe overextension, reversal imminent Strong PUT buy signal

70-80 Overbought Buyers exhausted, distribution likely Consider PUT, reduce CE

55-70 Bullish Healthy uptrend, momentum positive Hold/add CE positions

45-55 Neutral No clear direction, indecision Avoid — sideways market

30-45 Bearish Healthy downtrend, momentum negative Hold/add PE positions

20-30 Oversold Sellers exhausted, reversal likely Consider CALL, reduce PE

Below 20 Extreme Oversold Panic selling, bounce imminent Strong CALL buy signal

RSI Chart — NIFTY Daily with Price Panel + RSI Panel

Complete split-panel view showing overbought/oversold zones and divergence

Technical Indicators Master Guide | Page 9 | NIFTY & BANKNIFTY Options Trading
 NIFTY Daily — Price + RSI(14) Panel
23100

22750
RSI OVERBOUGHT ZONE
TGT

22400

BUY CE

RSI OVERSOLD ZONE SL

22050

21700
RSI (14) RSI Line
Overbought

70

50

30

Oversold

RSI Strategies for NIFTY Options

Strategy 1: RSI Overbought/Oversold Reversal

The classic RSI strategy — buy at extremes

• RSI < 30 (Oversold) + Support zone + Bullish candle → BUY CALL option
• RSI > 70 (Overbought) + Resistance zone + Bearish candle → BUY PUT option
• Stronger signal when RSI is at EXTREME levels (< 25 or > 75)
• BEST when combined with: Key support/resistance + EMA support + Candlestick pattern

Strategy 2: RSI 50 Centerline Cross

Momentum shift confirmation

• RSI crosses ABOVE 50 from below → Bullish momentum building → CE entry

• RSI crosses BELOW 50 from above → Bearish momentum building → PE entry
• This strategy works best in TRENDING markets (not sideways)
• Combine with EMA Golden/Death Cross for very high probability trades

Strategy 3: RSI Divergence (Advanced)

Price and RSI disagree — reversal coming

• Bullish Divergence: Price makes LOWER LOW but RSI makes HIGHER LOW → Buy CE
• Bearish Divergence: Price makes HIGHER HIGH but RSI makes LOWER HIGH → Buy PE
• Divergence is one of the MOST RELIABLE reversal signals — used by professionals
• Works on all timeframes — stronger on higher TFs (15-min, hourly, daily)

Technical Indicators Master Guide | Page 10 | NIFTY & BANKNIFTY Options Trading
 RSI Bearish Divergence — NIFTY Daily
23000
PRICE: Higher High

22750

22500

22250

22000
RSI (14)

70
50
RSI: Lower High
30
= BEARISH DIVERGENCE!

■■ ANGEL ONE SETUP

Angel One: Open NIFTY Chart → Indicators → RSI → Period: 14
Color: Light Blue (#74B9FF), Width: 2
Add horizontal lines at: 30 (green dashed), 50 (gray dashed), 70 (red dashed)
Settings → Overbought Level: 70, Oversold Level: 30
Best Timeframes: 5-min (intraday signals), 15-min (swing confirmation), Daily (position)

■ ENTRY / SL / TARGET RULES

OVERSOLD BOUNCE — Buy CE:
Trigger: RSI drops below 30 (or 25 for stronger signal)
Confirm: At key support level + Bullish candlestick (Hammer/Engulfing)
Confirm: EMA 9 and 21 showing potential crossover
Entry: Buy ATM or 1-strike ITM CE when RSI starts turning up from <30
SL: 40% of premium paid OR if RSI drops below 20 (trend continues)
Target: RSI reaches 50 (T1), RSI reaches 65-70 (T2 — partial exit)

OVERBOUGHT REVERSAL — Buy PE:

Trigger: RSI rises above 70 (or 75 for stronger signal)
Confirm: At key resistance + Bearish candlestick (Shooting Star/Engulfing)
Entry: Buy ATM or 1-strike ITM PE when RSI starts turning down from >70
SL: 40% of premium paid OR if RSI goes above 80 (momentum extending)
Target: RSI reaches 50 (T1), RSI reaches 35-30 (T2)

■ NIFTY LIVE EXAMPLE

RSI Oversold Bounce Trade on NIFTY Daily:
NIFTY falls 5 sessions. RSI drops to 26 (extreme oversold)
At 22,100 support. Hammer candlestick forms. EMA 21 at 22,080 holding.
Trade: Buy 22,200 CE at ■65. Stop: 40% loss = ■39 (if RSI < 20)
RSI recovers: 26 → 35 → 50 → 65 over next 8 sessions
NIFTY rallies to 22,650. CE = ■530
Profit: (■530-■65) × 25 = ■11,625 | Risk was: ■65×0.4×25 = ■650
Risk:Reward = 1:17.8 (exceptional)

Technical Indicators Master Guide | Page 11 | NIFTY & BANKNIFTY Options Trading
■■ WARNING
RSI can stay overbought (>70) for a LONG TIME in strong trends — don't sell too early!
Similarly, RSI can stay oversold (<30) during crashes — don't catch falling knives.
SOLUTION: Wait for RSI to START turning around + candlestick confirmation before entering.
Never use RSI alone on first 15 minutes of trading — pre-market gaps distort early RSI values.

Technical Indicators Master Guide | Page 12 | NIFTY & BANKNIFTY Options Trading
 Bollinger Bands
4
Period: 20 • Std Dev: 2 • Volatility + mean reversion + breakout

What are Bollinger Bands?

Bollinger Bands were developed by John Bollinger in the 1980s. They consist of three lines: a 20-period Simple
Moving Average in the middle (the 'basis'), and an upper and lower band placed 2 standard deviations away from the
middle. The bands EXPAND when volatility is high and CONTRACT when volatility is low. This dynamic behavior
makes them perfect for identifying volatility regimes, breakout setups, and mean-reversion trades in NIFTY.

Components: Upper Band = SMA(20) + 2×StdDev | Middle Band = SMA(20) | Lower Band = SMA(20) − 2×StdDev

Statistical fact: Approximately 95% of all price action occurs WITHIN the Bollinger Bands. When price touches or
exceeds the upper/lower band, it's statistically at an extreme level and may revert to the mean (middle band).

Bollinger Bands Chart — NIFTY Daily (Squeeze → Breakout)

Showing band squeeze, expansion, and breakout trading setup

NIFTY Daily — Bollinger Bands (20,2) Upper Band Mid (SMA) Lower Band
23200

Upper 22996
22960

22720 Mid 22716

BREAKOUT!
Buy CE
SQUEEZE
(Bands narrow)
22480 = Big move coming!
Lower 22436
SL

22240

22000

Bollinger Band Signals — Complete Guide

Signal Description Options Trade Reliability

BB Squeeze Bands contract (narrow range) Prepare Straddle/Strangle ★★★★★

Upper Band Touch Price hits upper band Consider PE (mean reversion) ★★★■■

Lower Band Touch Price hits lower band Consider CE (mean reversion) ★★★■■

Upper Band Breakout Price closes ABOVE upper band Strong CE (trend continuation) ★★★★■

Lower Band Breakdown Price closes BELOW lower band Strong PE (trend continuation) ★★★★■

Middle Band (SMA) Support Price bounces off middle band Add to CE in uptrend ★★★★■

Technical Indicators Master Guide | Page 13 | NIFTY & BANKNIFTY Options Trading
Middle Band (SMA) Resistance Price rejected at middle Add to PE in downtrend ★★★★■

Band Walk Price 'walks' upper band Very strong uptrend — hold CE ★★★★★

W-Bottom Two lows at lower band Reversal — buy CE ★★★★■

M-Top Two highs at upper band Reversal — buy PE ★★★★■

The Bollinger Band Squeeze — Most Powerful Setup

The Bollinger Band Squeeze occurs when the bands are at their narrowest in 6+ months. This signals a period of
historically LOW volatility. Markets alternate between low and high volatility — after a squeeze, a major breakout
ALWAYS follows. This is the setup professional options traders wait for to buy cheap Straddles (low IV + squeeze =
perfect setup).

• STEP 1: Identify the squeeze — upper and lower bands are extremely close together
• STEP 2: Check IV (Implied Volatility) — should also be low during a squeeze
• STEP 3: Watch for the breakout candle — high volume, closes outside the band
• STEP 4: Buy Straddle BEFORE breakout OR trade breakout direction with CE/PE
• STEP 5: Ride the expansion phase — bands widening = momentum accelerating

■■ ANGEL ONE SETUP

Angel One: Open NIFTY Chart → Indicators → Bollinger Bands
Period: 20, Standard Deviation: 2.0
Upper Band: Red (#FF6B6B), Middle: Yellow (#FFE66D), Lower: Teal (#4ECDC4)
Enable Band Fill: Light blue/translucent shading between bands
Best Timeframes: Daily (squeeze setup), 15-min (intraday breakouts), 5-min (scalping)

■ ENTRY / SL / TARGET RULES

BB SQUEEZE BREAKOUT — Buy CE or PE:
Setup: Bands have been narrow for 5+ candles (squeeze confirmed)
Breakout CE Entry: Price closes above UPPER band + Volume 2x average
Breakout PE Entry: Price closes below LOWER band + Volume 2x average
Stop Loss: Return inside the band (close basis) → exit trade
Target: Upper band + distance equal to band width at breakout
Straddle Alternative: Buy ATM CE + ATM PE before breakout (lower IV = cheap)

MEAN REVERSION — Touch & Fade:

Setup: In a RANGING market (not trending), price touches upper band
Entry: Bearish candle at upper band → Buy PE (fade the move)
Target: Middle band (SMA 20) — book 70% of profit here
SL: Price closes ABOVE upper band (would signal breakout, not reversion)
OPPOSITE: Price touches lower band in ranging market → Buy CE, target middle band

BAND WALK — Strong Trend:

In a strong trend, price 'walks' the upper band (multiple closes on/above it)
Do NOT short/buy PE during a band walk — it's a continuation signal
Hold CE positions, trail SL below the middle band (SMA 20)

Technical Indicators Master Guide | Page 14 | NIFTY & BANKNIFTY Options Trading
■ NIFTY LIVE EXAMPLE
BB Squeeze Straddle Trade — NIFTY Weekly Expiry:
Monday: NIFTY Bollinger Bands at tightest level in 3 months
NIFTY trading at 22,400. ATM CE = ■95, ATM PE = ■88. Total = ■183 per unit
Cost for 1 Straddle: ■183 × 25 = ■4,575
Wednesday: Strong GDP data → NIFTY breaks out to 22,900
CE = ■510, PE = ■18. Total = ■528. Profit = (■528-■183)×25 = ■8,625
The squeeze gave you: Low premium cost + explosive payoff on breakout

■■ WARNING
DO NOT use mean-reversion (touch-and-fade) in STRONGLY TRENDING markets!
In a trend, price repeatedly touches the upper band — shorting it loses money repeatedly.
KEY CHECK: Is the market trending or ranging? Trending → trade breakouts.
Ranging → trade mean reversion. Check ADX or EMA slope to determine.

Technical Indicators Master Guide | Page 15 | NIFTY & BANKNIFTY Options Trading
 Fibonacci Retracement
5
Levels: 23.6% 38.2% 50% 61.8% 78.6% • Natural market geometry

What is Fibonacci Retracement?

Fibonacci Retracement is based on the Fibonacci sequence (0, 1, 1, 2, 3, 5, 8, 13, 21...) discovered by Leonardo
Fibonacci in the 13th century. The key ratios derived from this sequence (23.6%, 38.2%, 50%, 61.8%, 78.6%) appear
naturally throughout nature, art, and architecture. In financial markets, these ratios identify where price is LIKELY TO
PAUSE OR REVERSE during a retracement before continuing the original trend.

The 61.8% level is called the 'Golden Ratio' (also known as Phi, φ) and is the most important Fibonacci level. When
price retraces to the 61.8% level and bounces, it's one of the highest-probability trade setups in technical analysis.

Fibonacci Level Price Significance Strength Options Strategy

0% (Swing High/Low) Starting point of retracement N/A Exit level / ultimate target

23.6% Very shallow retracement — strong trend Weak Book profits / light retracement

38.2% Moderate retracement — healthy correction Moderate 1st entry attempt (conservative)

50.0% Half-retracement — psychological level Strong Good entry zone with confirmation

61.8% (Golden Ratio)Most important level — deepest healthy retrace Very Strong Primary entry zone — highest probability

78.6% Deep retracement — trend weakening Moderate Last chance entry / invalidation zone

100% (Swing Low/High) Complete retracement — trend reversed N/A Trend is over — switch direction

Fibonacci Chart — NIFTY Daily (Bullish Retracement)

Swing High to Swing Low with all Fib levels, golden zone, and entry/SL/target

NIFTY Daily — Fibonacci Retracement (Bullish)

23400

SWING HIGH
23,180 0.0% — Swing High (23200)

23040

TGT1
23.6% — Weak Support (22870)

22680 38.2% — Moderate Support (22665)

50.0% — Strong Support (22500)

BUY CE HERE
GOLDEN ZONE (0.5 - 0.618) (61.8% bounce)
22320 61.8% — Golden Ratio (22335)

78.6% — Deep Retrace (22100)

SL
21960
SWING LOW 21,850
100% — Swing Low (21800)

21600

Technical Indicators Master Guide | Page 16 | NIFTY & BANKNIFTY Options Trading
How to Draw Fibonacci on NIFTY Charts

Bullish Fibonacci (Uptrend retracement)

Draw from Swing LOW to Swing HIGH

• Step 1: Identify the most recent SIGNIFICANT swing low (major bottom)
• Step 2: Identify the most recent SIGNIFICANT swing high (major top)
• Step 3: On Angel One: Drawing Tools → Fibonacci Retracement
• Step 4: Click the swing LOW first, then drag to the swing HIGH
• Step 5: The retracement levels appear automatically (23.6%, 38.2%, 50%, 61.8%, 78.6%)
• Key: In an uptrend, Fibonacci levels act as SUPPORT during pullbacks → Buy CE at these levels

Bearish Fibonacci (Downtrend retracement)

Draw from Swing HIGH to Swing LOW

• Step 1: Identify the significant swing HIGH (major top)

• Step 2: Identify the significant swing LOW (major bottom)
• Step 3: Click the swing HIGH first, then drag to the swing LOW
• Key: In a downtrend, Fibonacci levels act as RESISTANCE during bounces → Buy PE at these levels

■■ ANGEL ONE SETUP

Angel One: Open NIFTY Chart → Drawing Tools (pencil icon) → Fibonacci Retracement
For Bullish: Click swing LOW → Drag to swing HIGH → Release
For Bearish: Click swing HIGH → Drag to swing LOW → Release
Colors: 61.8% = Purple (most important), 50% = Green, 38.2% = Pink, 23.6% = Orange
Enable 'Extend Right' option to project levels forward in time
Best used on: Daily chart (major S/R), 1-hour (swing entries), 15-min (intraday)

■ ENTRY / SL / TARGET RULES

BULLISH FIBONACCI ENTRY (Buy CE at retracement):
Primary Setup: Price retraces to 61.8% level in an uptrend
Confirmation 1: Bullish candlestick pattern at 61.8% (Hammer, Engulfing)
Confirmation 2: EMA 21 or EMA 50 also near the 61.8% level (confluence!)
Confirmation 3: RSI oversold (<40) at the 61.8% level
Entry: Buy CE when price bounces above 61.8% level
Stop Loss: Below 78.6% level (if broken, trend is over)
Target 1: 38.2% level (previous support becomes resistance)
Target 2: 0% level (swing high — full recovery)
Target 3: Fibonacci EXTENSION levels (127.2%, 161.8%) for strong trends

GOLDEN ZONE ENTRY (50% to 61.8%) — Best Risk:Reward:

The zone between 50% and 61.8% is called the 'Golden Zone'
Price entering this zone is the highest-probability reversal area
Enter CE when any bullish signal appears within the Golden Zone
SL: Below 78.6% level | Target: Back to 0% (swing high)

Technical Indicators Master Guide | Page 17 | NIFTY & BANKNIFTY Options Trading
 ■ NIFTY LIVE EXAMPLE
NIFTY Fibonacci Trade — Golden Ratio Bounce:
Swing Low: 21,850 (support established 2 weeks ago)
Swing High: 23,200 (recent peak, Thursday high)
Fib levels: 38.2% = 22,684 | 50% = 22,525 | 61.8% = 22,365 | 78.6% = 21,988
NIFTY retraces from 23,200 to 22,380 (touches 61.8% at 22,365)
Hammer candle forms at 22,380. EMA 50 at 22,350. RSI = 38.
Trade: Buy 22,400 CE at ■115 | Stop: NIFTY < 21,988 (78.6%) → CE ~■35
Target 1: 38.2% (22,684) → CE = ■295 → Profit = ■4,500
Target 2: 0% (23,200) → CE = ■820 → Profit = ■17,625
Risk:Reward = 1:5.6 (excellent)

Fibonacci Extensions — Beyond the Swing High

After a retracement, when price resumes the original trend and moves BEYOND the swing high, Fibonacci
EXTENSION levels give you targets for the next leg up. The most used levels are:

• 127.2% Extension: First extension target — book 50% of position

• 161.8% Extension (Golden Extension): Primary profit target — strongest level
• 261.8% Extension: Extreme target for very strong trends only

■ NIFTY LIVE EXAMPLE

Extension Example (continuing the trade above):
Swing Low: 21,850 | Swing High: 23,200 | Range: 1,350 points
127.2% Extension: 23,200 + (1,350 × 0.272) = 23,567
161.8% Extension: 23,200 + (1,350 × 0.618) = 24,034
Use these as targets for CE options in strong uptrend continuation!

■■ WARNING
Fibonacci levels are NOT magic — they work because many traders watch them simultaneously!
A Fibonacci level alone is WEAK. Combined with EMA, VWAP, candlestick = VERY STRONG.
Draw Fibonacci from SIGNIFICANT swings only — not every minor wiggle in the chart.
Use CLOSING prices for swing high/low (more reliable than wicks for Fibonacci).

Technical Indicators Master Guide | Page 18 | NIFTY & BANKNIFTY Options Trading
 The Combined Indicator Strategy
6
EMA + VWAP + RSI + Bollinger Bands + Fibonacci = Maximum Confluence

Why Combine Indicators?

Each indicator measures a DIFFERENT aspect of market behavior. EMA measures trend, VWAP measures
institutional positioning, RSI measures momentum, Bollinger Bands measure volatility, and Fibonacci measures
mathematical support/resistance. When 3 or more of these indicators give the SAME signal simultaneously, the
probability of a successful trade increases dramatically. This is called CONFLUENCE — the most powerful concept in
trading.

Combined Indicator Chart — All Signals Aligned

The 'holy grail' setup — when EMA, VWAP, RSI all agree on the same candle

COMBINED SETUP — EMA + VWAP (RSI confirmed separately)

EMA 9 EMA 21 VWAP Price
23000

22750

22500 ALL 3 SIGNALS

ALIGNED HERE!
EMA+VWAP+RSI

22250

22000

The 5-Point Confluence Checklist

Before entering ANY options trade, run through this checklist. The more points that align, the higher the probability:

# Check Bullish (CE) Condition Bearish (PE) Condition Points

1 EMA Status EMA9 > EMA21 (Golden Cross) EMA9 < EMA21 (Death Cross) 1

2 VWAP Position Price > VWAP (above) Price < VWAP (below) 1

3 RSI Reading RSI > 50 and rising RSI < 50 and falling 1

4 Bollinger Bands Price near/above middle band Price near/below middle band 1

5 Fibonacci Price at Fib support (38.2-61.8%) Price at Fib resistance level 1

TOTAL Decision 4-5 points = Strong BUY CE 4-5 points = Strong BUY PE Max 5

Technical Indicators Master Guide | Page 19 | NIFTY & BANKNIFTY Options Trading
 ■ NIFTY LIVE EXAMPLE
PERFECT 5/5 BULLISH TRADE EXAMPLE — NIFTY 15-min:
Time: 10:30 AM | NIFTY at 22,420
■ EMA: EMA9 (22,415) > EMA21 (22,390) — Golden Cross formed
■ VWAP: Price at 22,420 > VWAP at 22,385 — Above VWAP (bullish)
■ RSI: RSI = 58 and rising from 45 — crossed above 50 center line
■ Bollinger: Price bouncing off middle band (SMA20 = 22,400) — support
■ Fibonacci: 38.2% retracement level at 22,415 — price bouncing from Fib support
TRADE: Buy 22,500 CE at ■82 | SL: Below VWAP (22,385) | Target: 22,680 (CE ~■185)
Profit: (■185-■82) × 25 = ■2,575 | Risk: (■82-■48) × 25 = ■850 | R:R = 1:3.0

Indicator Priority by Market Condition

Market Condition Primary Indicator Secondary Tertiary Strategy

Strong Uptrend EMA (9>21>50) VWAP (above) RSI (55-70) Buy CE at EMA bounce

Strong Downtrend EMA (50>21>9) VWAP (below) RSI (30-45) Buy PE at EMA bounce

Range-bound Bollinger Bands RSI (<30 or >70) Support/Resistance Straddle or fade extremes

Big move incoming BB Squeeze Low IV Any Buy Straddle/Strangle

Pullback entry Fibonacci (61.8%) EMA 50 RSI (<45) Buy CE at Golden Ratio

Intraday scalping VWAP EMA 9/21 Candlestick 3-min chart bounces

Event/news day Bollinger Bands RSI IV level Straddle before event

Technical Indicators Master Guide | Page 20 | NIFTY & BANKNIFTY Options Trading
 Quick Reference Cheat Sheet
7
Print this page • Keep at your trading desk • Check before every trade

Indicator Buy CE Signal Buy PE Signal Stop Loss Best Timeframe

EMA9 crosses above EMA21EMA9 crosses below EMA21 Close below EMA21 3-min scalp
EMA 9/21
(Golden Cross) (Death Cross) (for CE trades) 15-min swing

Price bounces off EMA50 Price rejected at EMA50

EMA 50 Close below EMA50 15-min, Daily
in uptrend in downtrend

Price above VWAP, Price below VWAP, Price closes below 3-min, 5-min
VWAP
bounces from VWAP rejected at VWAP VWAP (for CE) (Intraday only)

RSI < 30 (oversold), RSI > 70 (overbought), 40% of premium OR 5-min, 15-min
RSI
turning up turning down RSI drops below 20 Daily

BB Squeeze + break BB Squeeze + break Close back inside

Bollinger Bands Daily, 15-min
above upper band below lower band the band

61.8% Fib support 61.8% Fib resistance Below 78.6%

Fibonacci Daily, 1-hour
+ bullish candle + bearish candle Fib level

The Pre-Trade 60-Second Checklist

Step Question to Ask If YES → Good If NO → Wait

1 Is the 15-min trend clear (up or down)? Proceed to step 2 No trade — sideways

2 Is price on the right side of VWAP? Proceed to step 3 Wait for VWAP signal

3 Are EMAs aligned with the trend? Proceed to step 4 Wait for crossover

4 Is RSI confirming momentum? Proceed to step 5 Caution — check again

5 Is there a candlestick pattern signal? ENTER TRADE Wait for candle signal

6 Is my stop loss defined? Enter with confidence NEVER enter without SL

7 Is my position size within 2% risk? Execute the trade Reduce position size

Indicator Settings — Angel One Summary

Indicator Period/Setting Color Recommended Line Width Display Style

EMA 9 Period: 9 Cyan #00CEC9 2.0 Solid line

EMA 21 Period: 21 Orange #FDCB6E 2.0 Solid line

EMA 50 Period: 50 Purple #A29BFE 2.0 Dashed line

VWAP Default (auto) Hot Pink #FD79A8 2.5 Solid line

RSI Period: 14, OB: 70, OS: 30 Light Blue #74B9FF 2.0 Oscillator panel

Bollinger Bands Period: 20, StdDev: Upper:Red,

2.0 Mid:Gold, Lower:Teal 1.5 With fill shading

Technical Indicators Master Guide | Page 21 | NIFTY & BANKNIFTY Options Trading
Fibonacci Swing-based (manual draw)
61.8%: Purple, 50%: Green 1.0 Horizontal levels

Indicators are tools. Judgment is the skill. Practice is the path.

Paper trade 30 days → Small lots → Scale up as your edge proves itself.
For Educational Purposes Only • NIFTY & BANKNIFTY Options • Angel One Platform

Technical Indicators Master Guide | Page 22 | NIFTY & BANKNIFTY Options Trading