 "Bank Nifty may not hold recent gains; advise selling on rally: Ravi Nathani")
Nifty Bank Index
Last close: 40,834.65
Last close: 40,834.65
Hourly charts suggest that the Nifty Bank index may face challenges in sustaining its outperformance this week given the significant rally of nearly 2,700 points from the recent lows of 38,613 without a substantial correction. As a result, it is unlikely for the index to sustain its momentum in the near term.
The support level on the charts is anticipated to be around 40,200, which could act as a critical level to watch. Technical indicators such as the Moving Average Convergence Divergence (MACD) are currently displaying a negative outlook for the near term, indicating potential bearish momentum. Additionally, the Relative Strength Index (RSI) is also showing a declining trend on the charts, further supporting a cautious stance.
Hence, it is recommended for traders to consider selling on rally with a strict stop loss of 41,364, which also coincides with the R1 Pivot level of the week, or to accumulate at dips if the index starts correcting directly as the short-term trend is indicating a positive bias.
Also, investors should keep in mind the overall expected sideways pattern for the index over the next 10 days with a projected range of 41,300 to 39,600 on daily charts.
Conclusion: The index may struggle to hold its recent rally this week. The best trading strategy for near-term traders would be to sell on rallies, with a strict stop-loss of 41,364, while keeping an eye on the support level of 40,200.
The support level on the charts is anticipated to be around 40,200, which could act as a critical level to watch. Technical indicators such as the Moving Average Convergence Divergence (MACD) are currently displaying a negative outlook for the near term, indicating potential bearish momentum. Additionally, the Relative Strength Index (RSI) is also showing a declining trend on the charts, further supporting a cautious stance.
Hence, it is recommended for traders to consider selling on rally with a strict stop loss of 41,364, which also coincides with the R1 Pivot level of the week, or to accumulate at dips if the index starts correcting directly as the short-term trend is indicating a positive bias.
Also, investors should keep in mind the overall expected sideways pattern for the index over the next 10 days with a projected range of 41,300 to 39,600 on daily charts.
Conclusion: The index may struggle to hold its recent rally this week. The best trading strategy for near-term traders would be to sell on rallies, with a strict stop-loss of 41,364, while keeping an eye on the support level of 40,200.
Nifty Financial Services Index
Last close: 18,390.70
Last close: 18,390.70
Near-term charts suggest that the index is facing a critical support level at 18,336, which is the last hope for bulls to maintain their momentum. A breach below this level could quickly open doors for further downside targets at 18,165 and 17,900 with a strict stop-loss placement above 18,550 to manage risk.
Technical indicators such as the Moving Average Convergence Divergence (MACD) are displaying a downward trend, indicating potential bearish momentum in the near term. The Relative Strength Index (RSI) is also indicating an overbought condition, which further supports a negative bias. In addition, the Bollinger Bands are showing a flat curve, suggesting a sideways pattern with potential for correction, either in terms of time or price, in the next 6-10 days.
Therefore, the best trading strategy for traders in the near term would be to look for opportunities to sell on rally with the above mentioned downside targets in mind. It is important to consider the technical signals and set appropriate stop-loss levels to manage risk effectively.
Furthermore, it is worth noting that the current correction on the charts could be classified as a running correction, which is considered healthy from a technical perspective. This indicates that the correction may be temporary and could potentially provide buying opportunities once the correction is completed.
Conclusion: The index may face further downside pressure if the critical support level at 18,336 is breached. Technical indicators are indicating a negative bias in the near term, suggesting a potential correction. However, it is important to monitor the price action and adjust the trading strategy accordingly.
Technical indicators such as the Moving Average Convergence Divergence (MACD) are displaying a downward trend, indicating potential bearish momentum in the near term. The Relative Strength Index (RSI) is also indicating an overbought condition, which further supports a negative bias. In addition, the Bollinger Bands are showing a flat curve, suggesting a sideways pattern with potential for correction, either in terms of time or price, in the next 6-10 days.
Therefore, the best trading strategy for traders in the near term would be to look for opportunities to sell on rally with the above mentioned downside targets in mind. It is important to consider the technical signals and set appropriate stop-loss levels to manage risk effectively.
Furthermore, it is worth noting that the current correction on the charts could be classified as a running correction, which is considered healthy from a technical perspective. This indicates that the correction may be temporary and could potentially provide buying opportunities once the correction is completed.
Conclusion: The index may face further downside pressure if the critical support level at 18,336 is breached. Technical indicators are indicating a negative bias in the near term, suggesting a potential correction. However, it is important to monitor the price action and adjust the trading strategy accordingly.
(Ravi Nathani is an independent technical analyst. Views expressed are personal).