Will the bulls continue their momentum?
The Bank Nifty jumped over 1000 points from the intraday lows and it closed at 38623 with gains of 2.61% on Friday.
The index has formed a strong bullish bar after a 10% decline. On a weekly chart, it formed a long lower shadow candle and almost tested the 50DMA. A move above the 50DMA average which stands at 38895 may act as resistance and a decisive move above this level would give more power to bulls. The positive development is that it closed above the 23.6% retracement level of the prior decline. As of now, there is a trend reversal sign, however, we need confirmation for this which would come in the form of sustaining above the prior day's high for a bullish reversal. The RRG RS and Momentum are declining.
The momentum is below the 100 zone, which means the index entered a weakening quadrant. It took support at Anchored VWAP support and has not tested the gap area during Friday's bounce. On an hourly chart, the index closed above the moving average ribbon, but the MACD line is still below the zero line. It has to sustain above the 38800 for a bullishness to continue. In any case, a decline below 38389 will be negative for the index.
Strategy for the day
Bank Nifty closed just above the moving average ribbon on an hourly chart. It has formed a bullish engulfing pattern and to continue with bullish strength it has to sustain above the high of the bullish engulfing pattern. A move above the level of 38760 is positive, and it can test the level of 38992. Maintain a stop loss at 38630, above 38990, continue with a trailing stop loss. But, a move below the level of 38585 is negative and can test the level of 38374. Maintain a stop loss at level 38677. Below 38374, continue with a trailing 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.
Start Investing Now!
Open Free Demat Account in 5 mins