Key levels to watch out on Bank Nifty for Monday!

Bank Nifty on Friday recovered from the day's low and ended near the day's high.

Despite closing near the day's high, it had registered a modest loss of 0.27%. On the daily scale, it has formed a bullish candle with a long lower shadow, which clearly indicates buying interest was seen at lower levels. The 20DMA is placed at the level of 39781 and this level is likely to act as crucial resistance for the index in the near term. Only a close above this level will be positive for the index.

On Friday, it closed just above the 50DMA (39094), after a decent recovery from the day's low. The 20DMA is clearly in a downtrend, and the expanding Bollinger bands suggest that further decline is possible. The index has retraced almost 50% of the prior downtrend. The KST line is declining after negative divergence, confirming the bearishness. The RRG RS and momentum also declined below the 100 zone, which shows the loss of relative strength and momentum. The Anchored VWAP is at the level of 37337, which may act as near-term support. The prior swing low is also near this level. The 200DMA is at 36649.

A decisive close below the levels will be bearish for the index.

Currently, the PSU Bank, Private Bank and Bank Nifty are in the leading quadrant but losing their momentum. FinNifty is almost near the weakening quadrant. It is better to book the profits in some of these sector stocks or hold the position with a trailing stop loss.

Strategy for the day

Bank Nifty closed near the day high after taking support on the channel demand line. Only a move above the level of 39200 is positive, and it can test the level of 39390. Maintain a stop loss at the level of 39100. But, a move below the level of 39100 is negative, and it can test the level of 38755. Maintain a stop loss at the level of 39200.