Bank Nifty the first-hour bar holds the key!

On Friday, the Bank Nifty slipped almost 500 points from the day's high and it closed at four day low and below the prior day's low.

The index ended the day with a loss of 0.75%. It took support at 5EMA and closed below the weekly opening and the previous week's high. The Relative Strength Index has just closed below its 9 periods average. Currently, the Bank Nifty is 10.96% above the 200 DMA. It is 3.39% above the 50DMA and 3.85% above the 20DMA.

All moving averages are in the uptrend. The KST and the TSI are also in the bullish set-up. RRG RS and Momentum are also above the 100 Zone, but the concern is the loss of momentum. Private banks are not strong as compared to PSU banks. The Private bank index has been declining for the past three days. On the hourly chart, the index took support at the moving average ribbon and witnessed a small pullback in the last hour. A close above the prior day's high which stands at the level of 40839, will be positive and it would be the first sign of the resumption of the rally. But, a decline below the level of 40639 is negative and in that case, we would see a continuation of the fall.

On Monday, wait for the close of the first-hour bar for decisive directional clarity. Above the first hour, the high one may build a long position and hold the position for higher targets on the upside. On other hand, a move below the first hour low would be a sign of weakness.

Strategy of the day

Bank Nifty tested the moving average ribbon support on the hourly chart. But it has not given a reversal signal yet. A move above the level of 41160 is positive and can test the level of 41562. Maintain a stop loss at the level of 41040. Above the level of 41562, continue with a trailing stop loss. But, only a move below the level of 40920 is negative, and it can test the level of 40760. Maintain a stop loss at the level of 41040.