Bank Nifty has formed a dark cloud cover on the daily chart!
Bank Nifty trimmed nearly 350 points from the day's high and settled below the 43000 mark with a modest loss of 0.21% on Friday.
On a weekly basis, the index gained nearly 1.3%. On the daily chart, the index has formed a dark cloud cover, which shows the exhaustion of the trend. But, it is still trading above the 5 and 8EMA and both these moving averages are in the desired sequence and trending up. Hence, the trend is still in favour of bulls. The momentum indicators were moving flat. The RSI is in the overbought zone on the daily and weekly charts. No negative divergence is visible as of now. Currently, the index is trading 5.70% above the 50DMA and 2.35% above the 20DMA. The Elder impulse system formed a neutral bar on Friday.
Currently, no negative signals are available. On an hourly chart, it closed near the day's low but still, it is above the moving average ribbon. The ribbon is flattened, and the MACD line is below the signal line, showing some possible retracement. In any case, if the index moves below the level of 42770, we could get the confirmation of reversal of trend. On the upside, above the level of 43200, it can test the level of 44180 zone of resistance. At the moment, be, cautiously positive and any dips are likely to attract buying interest.
Strategy for the index
The index has formed a negative candle on the daily chart and it has closed near the day's lows. Only a move above the level of 43100 is positive, and it can test 43200. Maintain a stop loss at the level of 42910. Above 43200, continue with a trailing stop loss. But a move below the level of 42910 is negative, and it can test the level of 42610. Maintain a stop loss at the level of 43000. Below 42610, continue with a trailing stop loss.
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