Bank Nifty seems to be in trouble; here are the key levels to watch out!
Bank Nifty ended down by 1.39% on Thursday. It had formed a bearish candle as close was below the open and it has shadows on both the side. Also, it has formed a lower high and lower low in comparison to its prior candle. That said, it is still trading within the last week's range. The previous close which was around the level of 40288 holds crucial support for Friday. Currently, the price pattern looks like a double top, which was broken on an intraday basis on Thursday.
On the daily chart, Bank Nifty has closed below 8EMA support. The 20DMA support is at the level of 40153, which is just 1.19% away. A close below this level means the 10-day consolidation would end and will signal a reversal. The MACD has given a fresh sell signal. The RSI has declined below the 60 zone. It has broken the prior swing lows, which is negative for the sector. The +DMI declining and -DMI rising is an early indication that trend strength is waning. The KST and TSI indicators have been in the bearish set-up. It is better to avoid taking aggressive long position at this point.
Strategy for the day
Bank Nifty has closed below the 8EMA and it is decisively below the moving average ribbon. A move above the level of 40870 is positive, and it can test level of 41100 on the upside. Maintain a stop loss at the level of 40600. Above the level of 41100, continue with a trailing stop loss. But a move below the level of 40500 is negative, and it can test the level of 40300. Maintain a stop loss at the level of 40600 for short position. Below the level of 40300, continue with a trailing stop loss for a target of 39843 on the downside.
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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