For Bank Nifty the 20-DMA holds the key!

For Bank Nifty the 20-DMA holds the key!

by 5paisa Research Team Last Updated: Dec 15, 2022 - 09:03 am 18.1k Views
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Fierce volatility was witnessed on the August series F&O expiry day.

The Banknifty declined over 668 points from its day high. It closed with a loss of 0.22%. With the sharp decline in the last hour, the index has formed a bearish bar. It took support at 8EMA for the day. After opening with a positive gap, it traded above the opening highs, however, it traded in a tight range during the day. It was in the last hour, that the bears overtook and a sharp decline was witnessed which took the index below the 39000 mark. The 20DMA (38401) may act as immediate support. The RSI is flattened near the 60 zone. The MACD histogram has increased further on the bearish side. The index closed above the 200-DMA on July 22, but it is still in the downtrend. The Elder impulse system has formed a third neutral bar. Currently, it is 8.2% above the 50-DMA. The KST and the TSI are in the bearish structure. Half of the index stocks ended with losses. Friday's weekly close is important for the immediate future, as the index is still below the last week's low. At the weekend, it is better to have a cautious approach on both sides and don't carry over the leverage position.

Strategy for the day

Bank Nifty after witnessing sharp volatility, ended the day in red and formed a bearish bar. Going ahead, only a move above 39100 is positive, and it can test the level of 39389 on the higher side. Maintain a stop loss at 38950. Above the level of 39389, continue with a trailing stop loss. But, a move below the level of 38885 is negative, and it can test the level of 38637. Maintain a stop loss at 39050. Below the level of 38637, continue with a trailing stop loss. 

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