Formation of bearish bar on the daily chart indicates the bears have got their toe in the door!

Going forward, if the index does not close above the level of 39760 in the next one or two days, we can consider Tuesday's move as a failed breakout. 

Bank Nifty had moved above it's important psychological level of 40000 in early part of the trading session, however, it faced resistance at the higher band of Bollinger band and slipped nearly 400 points from day's high to end with modest loss on Tuesday. Bank Nifty formed a bearish candle as close was lower than open level. 

 Sharp declines during the day show some distribution is going on. The higher future volume confirms this argument. Only a lower high and a lower low bar will confirm the reversal. As of now, no indicator is giving a bearish signal. A close below Tuesday's low of 39564 will give the first signal for reversal. On an hourly chart, the MACD has given a fresh sell signal. The daily KST is bearish more. Importantly, the trend strength indicator ADX is declining. A day before weekly derivative expiry is crucial for the trend implications. It is better to be with the neutral strategy for now and wait for levels to trigger to initiate trading position. 

Strategy for the day  

Bank Nifty trimmed nearly 400 points from the day's high and it closed near the lower end of the day's range. It has formed bearish bar. A move only above the level of 39760 is positive, and can test the level of 40136 on higher side. Maintain a stop loss at the level of 39564. Above the level of 40136, continue with a trailing stop loss. But, a move below the level of 39564 is negative, and it can test the level of 39424. Maintain a stop loss at 39760. Below the level of 39424, continue with a trailing stop loss.