Bank Nifty decisively closed below 50DMA and indicates that the wounds of the bulls have only deepened!

resr 5paisa Research Team

Last Updated: 10th December 2022 - 03:27 am

1 min read

The daily range of Bank Nifty on Tuesday was about 900 points and it settled with a loss of 0.67%.

The index tested the 38.2% retracement level of the prior uptrend and decisively broke the 50DMA. It is now 0.96% below the 50DMA. After opening with a positive gap, it failed to sustain the initial gains and it declined sharply. The last 30 minutes of sharp recovery is because of short covering.

Bank Nifty is currently 4.51% below the 20DMA and 4.85% above the 200DMA. The Anchored VWAP support is at the level of 37328. The prior low support is at the level of 37950. The Elder impulse system has formed a third consecutive bearish bar. The MACD line declined further, and the histogram shows a strong bearish momentum. The RSI is now below 40 and indicating the index has entered into a bearish zone. As the index closed on the lower Bollinger band, it may experience a short covering bounce as the expiry is nearing. It is better to wait for a directional bias, at least for the first-hour candle to close. Then, accordingly one can take a position.

Strategy for the day

After oscillating around 900 points during the day, the Nifty witnessed a sharp bounce in the last 30 minutes amid short covering. Going ahead, a move above the level of 38520 is positive for the index and it can test the level of 38845 on the upside. Meanwhile, a strict stop loss is recommended for all the long positions and the stop loss level should be placed around the level of 38390. But, a move below the level of 38290 is negative, and it can test the level of 38070 on the downside. Maintain a stop loss at the level of 38990. Below the level of 38070, continue with a trailing stop loss.

 

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