From stagnation to skyrocketing: Bank Nifty's incredible range breakout takes markets by storm!

On Monday, Bank Nifty closed with a gain of over 1% and with this strong move, it managed to close above the previous week's high.

After opening with a positive gap, and index traded in a range for another two hours. A strong breakout of the opening high led to a sharp rally.

The PSU Banks along with the participation of ICICI Bank, and HDFC Bank led the index to close higher. The volume was also the highest in the last four days. Last week's consolidation registered a breakout on Monday along with a decent volume that gives the bulls a fresh strength.

Technical analysis 

On Monday, the index took support at 5 EMA and bounced. But, the decline in the histogram indicates lower momentum. There is no other weak signal at the moment. If the index sustains above the level of 42600 for at least the first hour of trading, It can test the level of 43000 within no time. Only an hourly close below the level of 42276 is negative, and it can test the level of 41800 on the downside. As the expiry is nearing, the rollovers will play a major role next three days. India VIX is still around 11.67, which may be a dangerous signal. Stay with a small position size on a long side for now. Any reversal from now will be a massive one.

Strategy for the day 

The Bank Nifty has broken out of a last week's range along with volume. Going forward, a move above the level of 42660 is positive, and it can test the level of 43000 on the upside. Maintain a stop loss at the level of 42500 for long position. Above the level of 43000, continue with a trailing stop loss. But, a move below the level of 42490 is negative, and it can test the level of 42269. Maintain a stop loss at the level of 42660. Below 42269, continue with a trailing stop loss.