Bank Nifty forms one of the most bearish bars in the recent days

The level of 34775 holds the key for now

On Wednesday, the Bank Nifty ended lower by 0.87%. Interestingly, it exactly reacted from the weekly downward channel resistance line. Moreover, on the daily chart it has formed one of the most sever bearish bar in the recent times. It also broke the inside bar's low and closed at four-day low. A sharp decline of over 550 points from the day's high has given bearish signals. It is forming a shooting star like candle on the weekly chart and declined below the 20weekly average. The index has taken support at the 23.6% retracement level of the current upswing, which is placed at 34775. A close below this will provide more strength to the bears, as it already broke the inside bar's bearish breakdown. The next level of support is at 34300, which is a 38.2 retracement level, which is as well as the 20DMA support. At this level, it also has the support of July 07 gap area. Expect this level to be touched maybe in a day or two days. The momentum is negative for now. The RSI is declining from the strong bullish zone to a neutral zone. The Elder impulse system formed another neutral bar. Bank Nifty has also declined below the Anchored VWAP. The index closed below the TEMA. On an hourly chart, it closed below the moving average ribbon along with the MACD line below zero, which has given a strong bearish signal. The daily Stochastic Oscillator is turning down from an extreme overbought condition. It is better to avoid long positions now. A decline below 34775 will lead to a bigger than expected fall. 

The Strategy for the day 

The Bank Nifty closed below at the crucial support. A move below 34775 is negative, and it can test 34300. Maintain a stop loss at 35000. Below 34300, it can test 33900 and continue with a trailing stop loss.