Bank Nifty traders enjoy the bull run, but don't get complacent; here's why!

On Friday, Bank Nifty logged gains of nearly 1.5% and with this it has reclaimed it's 200DMA. On the weekly basis, it has jumped nearly 6%, with this the Bank Nifty has broken out of the weekly sloping channel and closed above the previous minor swing high decisively. The 20weekly moving average entered an uptrend. The weekly MACD has given a fresh buy signal. Importantly, the index closed above the 50week moving average, and the 20 periods RSI closed above the 50 zone. This is a stronger bullish signal. The RRG Relative Strength is oscillating around the 100 zone. In fact, the relative momentum declined last week compared to the broader market. On a daily chart, the index extended 5.79% above the 20DMA and 6.72% above the 50DMA. And it has also closed above the upper Bollinger bands. It shows over extension of the trend. The RSI entered the overbought zone. As of now, there are no negative divergences visible. The Stochastic is in the extreme overbought condition. On a 75-minute chart, there hidden divergence is visible. For now, it is better to have a cautiously optimistic approach. The index may enter into consolidation sooner or later. On the upside, it has potential to test the level of 37125. On the downside, the level of 36422 which is 200DMA is likely to act as an immediate and important support. Monday's first hour high and low will be key for a directional bias.

Strategy for the day

The Bank Nifty strongly closed near day high. Only above 36800 is positive, and it can test 37125. Maintain a stop loss at 36422. Above But, a move below 36422 is negative, and it can test 36300. Maintain a stop loss at 36650. Below, 36300, continue with a trialling stop loss as it may test level of 36100.