Banknifty forms a Bullish Engulfing pattern!

Banknifty forms a Bullish Engulfing pattern!

by 5paisa Research Team Last Updated: Feb 28, 2023 - 09:56 am 872 Views

The Banknifty rescued the frontline indices from a major fall as Banknifty advanced 1%. Banknifty closed near the days high and it formed a bullish engulfing pattern on the daily chart and it closed above the 200EMA. Interestingly, the RSI bounced from the 30 levels to 37.77. On an hourly chart, it closed above the prior minor high and registered a double bottom pattern. It also formed a higher low on the hourly chart. These are the short-term positives for the index. Furthermore, it has closed above the 5EMA. In any case, a close above the level of 40472, will further strengthen the bull power. Monday's strong move of 1% reduced the bearish momentum. Going forward, the Banknifty may face resistance at 20DMA which stands at the level of 40993. Above this, expect the index to test the prior swing high and the 50DMA. On the downside, a close below 200EMA again will resume the downtrend, and a close below 200DMA which stands at the level of 39250 will confirm the further downside in an impulsive way. All the Banknifty components closed with gains is another positive sign. At least in the near term avoid aggressive short position. 

Strategy for the day 

The Banknifty gained 1% on Monday and it formed a bullish candle as a result it has showed the first signs of reversal on the daily chart. Going forward, a move above the level of 40363 is positive, and it can test the level of 40555. Maintain a stop loss at the level of 40230 for long positions. Above the level of 40555, continue with a trailing stop loss. Avoid short positives for the day as we are anticipating a trend reversal on the basis of formation of bullish engulfing pattern and as long as, the low of bullish engulfing pattern is protected avoid short position. 

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