Bank Nifty Surges Higher: Is it Time to Cash In or Hold Out for More Gains?

On Thursday, Bank Nifty ended with gains of 0.40% and reclaimed its important psychological mark of 43000. 

On the daily chart, there was a formation of bullish candle carrying higher high and higher low compared to its prior trading candlestick pattern. With this it has reached another swing high. It closed above the 78.6% retracement level of the prior downtrend. With a waning momentum, this massive rally is ignoring inherent strength.

The daily 14-period RSI has flattened in an overbought zone, and the MACD histogram is declining. The last 15 minutes of the day saw the highest volume of the day and the small body candle shows the distribution. As the index has achieved all the pattern targets, It may witness a sudden profit booking. It met our target of 43000-100. Now the question is how long it can move higher?

Now, a decisive close above the level of 43080 is needed to continue the rally. A closed below the level of 42880 is needed on an hourly closing basis for a downside move. Only a close below the level of 42736 would be a sign of bearishness. Stay cautiously optimistic at the weekend.

The Strategy 

Bank Nifty registered a fresh swing high with the formation of the bullish candle and technically, there are no signs of weakness as it's trading above its key moving averages. A move above the level of 43080 is positive for the index and on the upside, it can test the level of 43380. Maintain a stop loss at the level of 42930. Above the level of 43380, continue with a trailing stop loss. But, a move below the level of 42950 is negative, and it can test the level of 42736 on the downside. Maintain a stop loss at the level of 43080. Below the level of 42736, continue with a trailing stop loss.