A bullish day out likely for the Banknifty!

The Banknifty extended it's rally for third day in a row on Tuesday and it formed a sizable bullish candle with his it has broken out of a downward channel decisively. Also, it has closed above its prior swing high. The index has formed two consecutive strong sizable candles on the daily chart. After two days of a strong move, the 50DMA has entered an uptrend. Now it is 4.21% above the 50DMA. The long-term trend indicator 200DMA is just 1.95% away. As the 50DMA is in an uptrend, there is a possibility of testing 200DMA, which is placed at 36438. In fact, the Banknifty has already closed above the 200EMA, which acted as resistance. Prior swing highs are placed at 35958 and 36083. The index needs to clear this zone of resistance on a closing basis to continue its uptrend. The RSI has crossed it's level of 60 and it has entered in a strong bullish zone at 64.57. The RSI and MACD lines are already above the prior swing highs. This is also a stronger bull signal. It closed above the Anchored VWAP. The Elder impulse system has formed a second successive strong bullish bar. The TSI and KST indicators have been in bullish setups. As long as it trades above the 35400 it is positive for the day, for a trend change on the downside it needs to close decisively below the 34598 mark, till then buy on dips would be the recommended strategy.

The Strategy for the day

The Banknifty has formed a second consecutive strong candle. A move above 35758 is positive, and it can test 36083. Maintain a stop loss at 35555. Above 36083, continue with a trailing stop loss. But, a move below 35555 is negative and it can test 35436. Maintain a stop loss at 35670.