Bank Nifty setting up for a big move!

On Friday, the Banknifty oscillated in the range of about 500 points.

On the daily chart, it formed a small-bodied bearish candle with shadow on either side of the body. Meanwhile, on the weekly chart, it has formed a long-legged doji. It is an interesting setup. Next week will be crucial to get clarity on this kind of indecisiveness. The 5EMA has been acting as strong support for the index since October 14. It has not broken the moving average ribbon even on the hourly chart. In fact, the Banknifty has been trading in the 40830 - 41530 zone for the past nine days. A breakout of this range is likely to give a sharp move. The last week's doji candle's price action engulfed the prior week's price action. For the next week, the zone of 41530-840 is a very crucial resistance for the index. As long as it fails to close below the level of 40819, it will not give any bearish signal.

The RSI once again declined below its 9-period average. The histogram has declined, and the MACD line flattened. These technical developments are because of a sideways move. As there are no trend change implications currently, trade with neutral strategies until the breakout of the range happens.

Strategy for the day

The weekly formation of long-legged doji shows indecisiveness. That said, the Bank Nifty is still above the moving average ribbon on the hourly chart and it is also trading above the support level of 40840. A move above the level of 41300 is positive, and it can test the level of 41575. Maintain a stop loss at the level of 41140. But, a move below the level of 41110 is negative, and it can test the level of 40960. Maintain a stop loss at t41255. Below the level of 40960, continue with a trailing stop loss.