Will Bank Nifty continue with the bullish trend!
On Monday, Bank Nifty closed with gains of 0.98% and with this it has managed to close above the August 19 high and above the Doji candle high of prior trading session. As a result, it has negated the bearish implications of a doji candle and inside bars. Though the index closed above the prior high, but the indicators are still in a downtrend. The MACD line and RSI are declining. In the last three hours of trading, the index has formed lower high and bearish candles. These sideways action candles are giving some caution to the bulls. But there is no confirmation or strong signals for a reversal on the downside.
Importantly, the Bank Nifty also closed above the level of 39759, which is a 78.6% retracement level of the prior downtrend. It almost met the downward channel's target. The negative momentum has declined. Tuesday's momentum has to continue on the upside, as all the index components are closed with bullish bias on Monday. Only a close below the level of 39400 is negative, otherwise, be with the trend and continue buying on dips.
Strategy for the day
Bank Nifty formed a sizable bullish candle with open=low candle and moreover, it has negated bearish implications of doji candle. Also, it is has closed at the new swing high. Going forward, a move above the level of 39865 is positive, and it can test the level of 40120. Maintain a stop loss at level of 39636 for long position. Above the level of 40120, continue with a trailing stop loss. But a move below the level of 39580 is negative for index and it can test levels of 39400 on the downside. Maintain a stop loss at the level of 39636. Below the level of 39400, continue with a trailing stop loss.
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