BankNifty the joker in the pack!

The BankNifty opened lower on Monday, however, it recovered nearly 330 points from the day’s low and settled above 43,700 mark. It formed a bullish candle on the daily chart as the close of the day was greater than opening level. The Banknifty traded in the previous day's range and this resulted into formation of inside bar. The index has not broken any supports till now. It is still above 43372, which is the prior base breakout level. It is taking support at 5 and 8 EMAs to continue an uptrend. Even on Monday, it tested the 8 EMA and bounced to close higher. HDFC Bank and the PSU banks have contributed the majority of the gains. The RSI is now almost at 73, and the MACD line is about to cross the signal to give further bullish signs. The ADX trend strength indicator is strong at 34.36. The only concern is the volume, which is lower. After the first hour of trading, it traded in a very tight range and with low volume. For Tuesday, the 43765-980 zone will be crucial for the trending move. Wait for these levels to break for a directional trade.

The Strategy

The Banknifty mostly traded within the range of prior trading session and as a result it has formed an inside bar. However, it has been trading above its crucial moving averages and it has not breached any support till now. Going ahead, a move above the level of 43721 is positive, and it can test the level of 44000 on the upside. Maintain a stop loss at the level of 43615 for the long positions. Above the level of 44000, continue with a trailing stop loss. But, a move below the level of 43615 is negative, and it can test the level of 43426. Maintain a stop loss at the level of 43719. Below the level of 43426, continue with a trailing stop loss for lower target.