Bank Nifty Analysis & Trading Strategy for September 20, 2023

The Bank Nifty ended Monday’s session with losses of over half a percent; as a result, it closed below the previous day’s low, forming a bearish candle. The decline with higher volume shows a clear reversal signal. It has formed a shooting star-like candle on the daily time frame. The last three days of price action clearly constitute a bearish pattern. As we expected, the overextension of the trend is almost coming to an end. It’s advisable to stay away from aggressive long positions unless there’s a close above Monday’s high of 46,310. On the downside, the immediate support is at 45,725, which represents a 23.6% retracement level of the prior uptrend. The 8 EMA support is placed at 45,660. Below these levels, the crucial support is placed at 45,363. The 14-period daily RSI is declining but still above the level of 60, as well as above the 9-day average. The MACD histogram shows a decline in momentum. The Elder’s impulse system has formed its first neutral bar after September 06. On the hourly chart, the index closed on the moving average ribbon support. The hourly MACD and RSI have confirmed negative divergence. Expect a soft opening, and thereafter, watch out for the mentioned levels as a pathway for future movement in the index.

Strategy for the day

The Bank Nifty sharply broke the tight range on an hourly time frame. Moving forward, a move only above the level of 46,080 would be positive, potentially testing levels of 46,210 followed by 46,310 on the upside. Maintain a stop loss at the level of 45,970. Above the level of 46,310, continue with a trailing stop loss. However, a move below the level of 45,950 is negative, potentially testing the level of 45,790 on the downside. Maintain a stop loss at the level of 46,080. Below 45,790, continue with a trailing stop loss.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet, and is subject to changes. Please consult an expert before making related decisions.