Bulls are back with a vengeance, watch out of for HDFC twins!

On Wednesday, the bulls came back with a vengeance as the Bank Nifty jumped over 1% and ended the day near the day's high. Interestingly, the Bank Nifty closed above the previous day's high and erased all the last two days of losses. Importantly, it reclaimed its long-term moving average i.e. 200DMA. It formed an engulfing like candle with a strong bullish bar. As it registered a new high close in the current swing, all the weaker signs were also erased. On Wednesday, we observed that the short-term moving average i.e. 20DMA crossed over 100DMA, which is a bullish signal. The RSI is near the overbought zone. Interestingly, the MACD histogram has declined even after Wednesday's huge move.

On a 75-minute chart, the moving average ribbon acted as support, and the MACD line was about to move above the signal line for a bullish signal. The rally is mainly because of PSU Banks' gains, in particular SBI's rally. Even though ICICI Bank and HDFC Bank closed flat, the rally was mainly attributed to PSU Bank Goliath SBI's rise. The index future volume is almost equal to the previous day. For an uptrend to continue, it must sustain above 36250 on a closing basis. As there is no significant weaker signal, be with a positive bias if it stays above the level of 36250, but in the second half of the day be watchful amid monthly derivative expiry.

Strategy for the day

Considering that the Bank Nifty is trading above its all-important moving average, and it has managed to close at the day high and at a new swing high, be with a bullish bias. A move above 36800 is positive, and it can test the levels of 37050. Maintain a stop loss at the level of 36655. Above 37050, continue with a trailing stop loss. But a move below 36655, it can test 36435. Maintain a stop loss at 36740.