Fraction theory is used by stock exchanges to determine the possible buy (PB) of shares and the resistance for that day (R). If PB is found near to R, then sale the share for Intraday (within the day). This is called fraction theory. The method is used by Nifty/Sensex and this theory is very effective. This theory provides intraday and trading in Intraday which is a tedious task, but using this useful technique, you can get support resistance for Nifty/Sensex.
This fraction theory is based on the previous day price movements of a stock. It calculates the support and resistance levels of the stock for the next day.
Y = (H + L + C) x 0.67
S = Y - H
R = Y - L
PB = Y - C
Where, H= Previous Day High L= Previous Day Low C= Previous Day Close Y= Sum of H, L & C 0.67 = ratio of 2:3 as in pivot theory and it is constant S = Support for that day R = Resistance for that day PB = Possible Buy If PB (Possible Buy) is nearer to R (Resistance for that day), sale it for intraday Now, you can buy the stock for resistance levels.