Here are the key levels to watch out for Bank Nifty!

Similarly to the Nifty, the Bank Nifty also opened below 20DMA and but it formed an open=low candle. In the end, it closed its two days losing streak as it jumped over 1% on Tuesday.

On the daily chart it has formed a sizable bullish candle. The 23.6 retracement level (37996) acted as support for the day. Despite a 900 points recovery from day low, it failed to close above 8EMA. But, it managed to reclaim its 20DMA. Meanwhile, the MACD histogram shows an increased bearish momentum. The index filled its prior day's down side gap. The RSI has declined below 70 and it sustained at around 62. Interestingly, even after the recovery, the positive momentum indicator +DMI declined.

During the last 15 minutes, massive volume indicates the short covering. On an hourly chart, the index closed above the moving average ribbon, but the MACD line is still below the zero line. The KST indicator has given a fresh sell signal. The RS momentum declined below 100. As of Tuesday, the rollovers are less than last month, 3 and 6 months on average. Tuesday move may be because of short covering, as the monthly expiry is just two days away. Stay cautious on the bounce. Be with a small position size with strict risk management.

Strategy for the day

On the daily chart the index has formed a sizable bullish candle. Meanwhile, on the lower time frame i.e. 75- minute chart it has formed a shooting star candle, with this diverse candle formation, we would suggest wait for the index to move above the level of 38700 and if it sustain above this level one can initiate long position and it can test the level of 38982 on the higher side. Maintain a stop loss at 38580. Above 38982, continue with a trailing stop loss. But, a move below 38580 is negative, and it can test the level of 38183. Maintain a stop loss at 38650. Below 38183, continue with a trailing stop loss.