BankNifty is in a commanding position!

On Wednesday, the Banknifty outperformed the frontline gauge as it ended the day up by 0.70% and with this, it closed at a new lifetime high. 

The price action on the daily chart formed a bullish candle carrying a higher high and higher low. The index has now extended over 50% of the prior upswing. In any time frame, the index has not yet given any kind of weak signal. Even on the hourly chart, it has not closed below the prior bar low. Wednesday's strong bullish bar shows the strength in the sector. Unless it closes at least below the prior bar low, it will be the first sign of weakness. As mentioned earlier, the index may go on to test the levels of 43069 -288 on the higher side in the short term. That said, there are negative divergences developing on the hourly chart, but this needs confirmation. Futures data shows long unwinding is happening in the market. The index breadth is negative. Only Kotak Bank and HDFC contributed towards today's gain. However, we would suggest don't fight the trend and continue with the long position as long as the prior day's low is protected.

Strategy for the day

Bank Nifty traded in the range mostly. But, it formed a bullish bar carrying a higher high and higher low. A move above the level of 42585 is positive, and it can test the level of 42755 on the upside. Maintain a stop loss at the level of 42454. Above the level of 42755, continue with a trailing stop loss. But, a move below the level of 42454 is negative, and it can test the level of 42194. Maintain a stop loss at the level of 42565. Below 42194, continue with a trailing stop loss. However, the call for the day would be with the trend as long as the previous day's low is not breached.