Will Bank Nifty reverses its sequence of lower high and lower low?
The Bank Nifty on an intra-week basis moved above its prior week's high, however, it witnessed profit booking at higher levels, and closed lower by 1.26%.
The index formed a candlestick pattern which resembles to shooting star candle on the weekly chart. The 20-week moving average acted as resistance for the last two swing highs. On the final trading session of the week, it formed a long-legged small body candle and it formed sequence of lower low and lower high for the last four days. The last hour's recovery has failed to close above the opening level. The RSI is below its 9-periods average, which is a sign of weakness. The histogram shows a decline in the momentum. The 100-day moving average acted as resistance during the last week.
Bank Nifty is trading 2% above the 20DMA and 1.32% above the 50DMA. After the previous week's impulsive move, a bearish candle shows the exhaustion of the trending move. The two consecutive strong bearish Heikin Ashi candles confirm the weakness in the index. It is also trading below the Anchored VWAP ( 34815). The RRG Relative Strength is above 100 but it has begun to decline. The Elder impulse system has formed a neutral bar. In short, the index must close at least above the prior bar high for a positive bias. A close below 34230 will result in a further down move. Current week's opening and the first hour of closing will give crucial directional bias.
The Strategy for the day
Bank Nifty is trading below the moving average ribbon on a 75-minute chart along with the MACD line above the zero line. The recovery in the afternoon session gave some hopes of further upside. A move above 34755 is positive, and it can test 34953. Maintain a stop loss at 34650. Above 34953, continue with a trailing stop loss. But a move below 34650 will be negative, and it can test 34517. Maintain a stop loss at 34755. Below 34517, continue with a trialling stop loss.
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. Also, The
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