Bank Nifty bulls on a song, avoid aggressive short position!

The outperformance of the Banknifty continued on Thursday as it jumped nearly 2% and it managed to close above its important psychological mark of 40,000. 

The strong move on Thursday resulted in a massive breakout. The 13 consolidation breakout with the sharp move and higher volume confirms the breakout. It has decisively closed above the prior pivots. Opened with a positive gap and sustained the initial gains till the end, which resulted in the formation of a sizable bullish candle. It cleared all the resistance and it is inching close to the previous lifetime high and has closed above the 78.6% retracement level. 

The RSI has broken out of a squeeze area and it has closed above its 9 periods average decisively. Even the weekly RSI is in a strong bullish zone and above the 60 mark. After flattening, the MACD line started to trend higher. The histogram is about to turn positive. The Elder impulse system has formed a strong bullish bar. The RRG RS and RS momentum are above the 100 zone. As long as it trades above the prior bar low, be with the trend. Avoid taking short positions as it is trading above its short-term moving average of 20DMA and moreover, this 20DMA is on a rising trajectory. 

Strategy for the day 

Bank Nifty outperformed and formed a sizable bullish candle. It led the market rally on Thursday and closed at a high. A move above 40265 is positive, and it can test the level of 40390 on the upside. Maintain a stop loss at the level of 40100 for long position. Above the level of 40390, continue with a trailing stop loss. It is better to avoid short positions at this point unless it closes below the first hourly bar. Hence, watch out for the first-hour action closely.