Bank Nifty bounces back from day's low, forms a long lower shadow candle - Will it break Friday's range and soar to new highs?

5paisa Research Team 11th May 2023 - 11:12 am

For the third consecutive trading session, the Bank Nifty traded within Friday's range. On Wednesday, it recovered over 500 points from the day's low and closed with gain of 0.31%.

It opened with a positive gap but declined sharply in the first hour of trading, as the PSU Banks were trading deeply lower. However, later on index recovered from lower levels and formed higher high candles in a lower timeframe chart. Meanwhile, on the daily chart, it has formed a small body bullish candle with a long lower shadow which indicates buying on dips was the call of the day. Going forward, the last Friday's range is very crucial for the trend change. A decisive move above the level of 43588 will be positive for the index and may form a new high. But, a decline below the level of 43000 will be an initial sign of weakness. The Index is still trading above its key moving averages. The MACD has given a fresh sell signal. Hourly MACD is hovering around the zero line. The RSI is flat around the 60 zone.

In any case, if the index declines below Wednesday's low of 42822 it will be negative. On the upside, it has to cross the level of 43588 decisively on a closing basis. A move above last Thursday's high of 43740 is crucial to continue the uptrend.

Strategy for the day

The Bank Nifty recovered from the opening losses and closed positively. A move above the level of 43350 is positive, and it can test the level of 43600. Maintain a stop loss at the level of 43260. Above the level of 43600, continue with a trailing stop loss. But, a move below the level of 43260, is negative, and it can test the level of 42890. Maintain stop loss at the level of 43350. Below the level of 42890, continue with a trailing stop loss.

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5paisa Research Team

Disclaimer: Investment/Trading in securities Market is subject to market risk, past performance is not a guarantee of future performance. The risk of loss in trading and investment in Securities markets including Equites and Derivatives can be substantial.

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