Bank Nifty forms Tweezer Top pattern!

Bank Nifty ended Tuesday session with a loss of 0.38%. 

On Tuesday it opened at level of 44144.15 which was almost an identical high when compared to its prior trading session as a result it has formed a pattern known as Tweezer Top. The pattern is a signal of weakness. As the index formed an open high candle, it is also a weaker signal. The index reacted from the upper Bollinger band. Tuesday fall, with a higher volume than the last three days, can be termed as a distribution day. The RSI has formed a negative divergence. The MACD and the signal line are moving in together, and the histogram at the zero line shows a lack of bullish momentum. After two bullish bars, the Elder impulse system has formed a neutral bar. The KST indicator is about to give a bearish signal. The index has declined into the weakening quadrant on RRG charts, as both momentum and relative strength lines are below 100. The index is trading above all short-term moving averages. 

The index has to close below the level of 43815 for a confirmation of the Tweezer Top candle's bearish implications and a reversal signal. In any case, it closes below the level of 43666; it can test the level of 43062, which is 20DMA. The weekly closing is very important for the future direction. If it closes below 43078, a lower low will form, and the reversal will confirm. Avoid taking aggressive long positions and wait for confirmation for the beairsh implications for short positions. 

Strategy for the day  

The Bank Nifty has given early signs of reversal. A move above the level of 43980 is only positive, and it can test the level of 44110. Maintain a stop loss at the level of 43860. But, a move below the level of 43860 is negative, and it can test level of 43666. Maintain a stop loss at the level of 43980. Below the level of 43666, continue with a trailing stop loss.