Bank Nifty has slipped below 5EMA, what's in store next?

Bank Nifty opened lower on Friday and it took support around the 8EMA.

Interestingly, it closed below the prior bar low and the below the 5EMA. It has formed a shooting star like pattern on the weekly chart. Meanwhile, on the daily time frame, MACD has given a fresh sell signal, and the RSI has declined below the 70 zone. This may lead to further profit booking in the index. The index may retrace towards its 20DMA, which is placed at the level of 42480. In the bear case scenario, a 23.6% retracement of the uptrend is possible which stands at the level of 42068. There is a probability of testing these levels. The index has failed to close decisively above the 43388 level for the last two weeks.

This is nothing but a 61.8% extension of the prior trend. A bounce from the 20DMA may surpass this strong resistance. On an hourly chart, the index is still above the moving average ribbon, and the MACD line is just on the zero line, which means it has not given the short signal yet. On Monday, we may get a get clear directional signal for the short term.

Strategy for the day

After opening with a gap down on Friday and taking support at the 8EMA, the index mostly traded within the range. A move above the level of 43145 is positive, and it can test the level of 43455. Maintain a stop loss at the level of 43035. Above the level of 43455, continue with a trailing stop loss. But, a move below the level of 43000 is negative, and it can test the level of 42865. Maintain a stop loss at the level of 43145. Below the level of 42865, continue with a trailing stop loss for lower targets.