Bank Nifty's roller coaster ride! Gains 0.33% but loses almost 300 points from day's high, forming a shooting star - what's next?

Bank Nifty ended the weekly expiry day with gains of 0.33%. Though it closed on a positive note, it had lost almost 300 points from the day's high. During the day, it managed to move above the swing high of May 04, but it failed to sustain at higher levels and as a result, it has formed a shooting star and closed within the range.

For the last six days, the index has been trading in the 42600-43740 zone. During these six days, the daily ranges are on the higher side. The directional momentum has not improved. In fact, it further declined, as it traded in the first hour's range. The MACD line is clearly below the signal line and confirms the weakness. The Bollinger bands began to contract from an over extension of a trend. The RSI is flat in the bullish zone. The Elder impulse system has formed another neutral bar. The shooting star at the swing high shows exhaustion. It is better to be neutral until it gets confirmation for a reversal and the reversal confirmation would be seen only on a close below the lower end of the range. As if now, the index is trading above it's all key short- and long-term moving averages, hence, it not prudent to take a short position.

Strategy for the day

The Bank Nifty trimmed its gains and closed below the opening level of the day as a result it formed a bearish candle. Going forward, a move above the level of 43570 is positive, and it can test the level of 43825 on the upside. Maintain a stop loss at the level of 43465. Above the level of 43825, continue with a trailing stop loss. But a move below the level of 43465 is negative, and it can test the level of 43265. Maintain a stop loss at the level of 43465. Below 43265, continue with a trailing stop loss.