MACD and RSI Signals flash red for Bank Nifty: Is it time to sell?

5paisa Research Team 19th May 2023 - 11:09 am

On Thursday, Bank Nifty gained 0.12%, however, it trimmed 300 points from the day's high.

The rising trendline acted as support for a second successive day for the Bank Nifty. The index bounced from the support and was able to close positively. With the PSU Bank's decline, the index failed to hold the opening gains. Though it closed positively, it formed a bearish bar on the daily chart. It closed on the 5EMA. On a weekly time frame, the index is forming a long-legged doji candle. In any case, on a close below the level of 43673, it will be negative and will result in a breakdown.

The MACD has given a fresh sell signal. The 14 periods daily RSI has flattened in the bullish zone. The KST has also given a fresh sell signal. The Bank Nifty declined into the lagging quadrant on a daily RRG chart, as the momentum and relative strength are below 100. More and More banking stocks are witnessing profit booking, and it may lead to a further decline in the index. Avoid long positions on the weekend.

Strategy for the day

For the second day in a row, the Bank Nifty held its support defined by the trendline. Though it closed on a positive note, it ended significantly down from the day's high as the volatility in the latter part of the day knocked the bulls. Going forward, a move above level 43810 is positive, and it can test the level of 44030 on the upside. Maintain a stop loss at a level of 43730. But, a move below the level of 43703 is negative, and it can test the level of 43590 on the downside. Maintain a stop loss at the level of 43810. Below the level of 43590, 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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