Bank Nifty bulls made a strong comeback!

Bank Nifty led the markets rally on Monday.

The PSU banks and the public sector giant SBI gained the most, while the Bank index surged over 1.5%. On the daily chart, it has formed a sizable bullish candle with this it registered the most bullish candle after September 30. It closed above the prior day and above the previous minor high. It also closed above the 20DMA and 50DMA. With this, it is now trading above its 20, 50, 100 and 200DMA. Interestingly, the MACD has given a fresh buy signal. After taking support at its nine periods average, the RSI has moved above the 55 zone and above the swing high of October 06, 2022.

The index retraced above 50% of the prior downtrend. The 61.8% retracement level is at the level of 40138, which may be immediate resistance for Bank Nifty. In a shorter period, the Bank Nifty has broken an ascending triangle, which is a bullish pattern. For now, Monday's low of 39146 will act as important support. A decline below this means it will dip below the 20 and 50DMAs. Let us wait and watch the behaviour of the index around the circular level of 40138 in the near term.

Strategy for the day

Bank Nifty outperformed and closed at the day's high. On the daily chart, it formed a sizable bullish candle, which indicates the trending bias for the day. Going forward a move above the level of 39960 is positive, and it can test the level of 40138. Maintain a stop loss at the level of 39900. Above the level of 40138, continue with a trailing stop loss. But, a move below the level of 39868 is negative, and it can test the level of 39650 on the downside. Maintain a stop loss at the level of 39960.