Bank Nifty looks strong, but it's approaching at strong resistance level!
The Bank Nifty logged gains of 0.84% on Monday and it formed a bullish candle on the daily chart. As it managed to close above 38200, it has managed to surpass swing high of August 04, 2022. Bank Nifty is now trading above it's 20, 50, 100 and 200DMA.
Interestingly, the 20DMA which is a short-term moving average has managed to crossover the 200DMA which is a long-term moving average from below and this indicates bullishness. Going forward, the 20-period Tripple Exponential Moving Average which stands at 38498 can act as a resistance. The Elder impulse system has formed four consecutive neutral bars, and this is the first time. After several months, the index is trading 9% above the 50DMA. The declining MACD histogram shows a slowdown in momentum. In fact, the RRG RS momentum has declined below 100. On a daily RRG chart, the Bank Nifty moved down into the weakening quadrant, and on the weekly chart, also it has lost relative momentum. Several indicators have reached an extreme overbought condition, and a reasonable correction is due. As there are no weaker signals available, it is better to be cautiously optimistic. A decline below 37680 will give bearish signals. But a move above the level of 38260 resistance will lead to a sharp move towards next target of 38498. Keep a close watch on above mentioned levels as this can provide a trading opportunity.
Strategy for the day
Bank Nifty has closed above 38134 and witnessed breakout of the four-day consolidation with a strong bullish candle on the daily chart. A move above 38260 is positive, and it can test 38498. Maintain a stop loss at 38100. Above 38498, continue with a trailing stop loss. But, only a move below 38000 is negative, and it can test 37757. Maintain a stop loss at 38121.
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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