Bank Nifty forms an inside bar!
Bank Nifty declined nearly 1% on Tuesday and the price oscillated between the high and low of the prior trading session and led to the formation of an inside bar on the daily chart.
The 20DMA has been declining and is in a clear downtrend, 2.3% above the index. This is negative for the index. Meanwhile, the 50DMA has acted as resistance for the last two trading sessions. On Monday, the price moved above it on an intraday basis, however, it failed to close above it. On an hourly chart, the index has broken down the rising channel and ended its counter-trend. It also closed below the moving average ribbon, and the MA ribbon is in the downtrend. The MACD line declined below the zero line and the daily RSI is about to move below its nine periods average. The RRG RS and Momentum further declined in the below 100 zone.
As the index formed an inside bar, there are no trend change implications. Monday's high of 39315 and low of 38518 will be crucial resistance and supports for Wednesday. Either side breakout will give a decisive trade. For now, it is better to have a neutral view and wait for a break on either side of the range for a trading position.
Strategy for the day
Bank Nifty formed an inside bar and it closed near the day low. A move above the level of 38821 is positive, and it can test the level of 39107. Maintain a stop loss at the level of 38690. Above the level of 39107, continue with a trailing stop loss. But, a move below the level of 38690 is negative, and it can test the level of 38200. Maintain a stop loss at the level of 38821. Below the level of 38200, continue with a trailing stop loss.
DisclaimerInvestment/Trading in securities Market is subject to market risk, past performance is not a guarantee of future performance. The risk of loss in trading and investment in Securities markets including Equites and Derivatives can be substantial.
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