Bank Nifty forms a shooting star pattern on the weekly chart!

Bank Nifty

Indian Market
by 5paisa Research Team Last Updated: 2022-09-19T10:08:53+05:30

Bank Nifty ended the last week with gains of 0.89%, however, it closed significantly lower from the highest point of the week as it was down by over 1000 points from its intra-week high. As a result, it has formed a shooting star candle after forming a lifetime high. As a rule, we short position in the Index with a shooting star's high as a stop loss. That said, wait for a confirmation and confirmation will close in form of closing below the shooting star low. 

The index formed a bearish engulfing pattern at the previous lifetime high. The bearish patterns at the new highs are generally successful. It closed below the prior day's low and took support at 8EMA for the day. It also got the confirmation for the previous day's bearish candle below its low. The Index closed below the 23.6% retracement of the up move from the August 29 low. The RSI declined below its 9 periods average. It has also developed a negative divergence. The Elder impulse system has formed a neutral bar. After two days of decline, the Index is now 2.73% above the 20DMA (39694). MACD line is about to move below the signal for a bearish signal. The histogram declined drastically, which is a caution for the bulls. For now, it is better to avoid taking long positions. Only above the level of 41000, it can regain some bullish strength. But, declining below the level of 40350 is a strong bearish sign for the index. 

Strategy for the day 

Bank Nifty closed below the moving average ribbon on an hourly chart. A move above level 40961 is positive, and it can test the level of 41135 on the upside. Maintain a stop loss at the level of 40820. But, A move below the level of 40775 is negative, and it can test the level of 40350. Maintain a stop loss at 40880. 

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