Nifty Bank Still in Downtrend, But Selling Pressure Abating!

  • Stock Market Analysis
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Aayush Khanna/Investing.com - Investing.com

The primary concern everyone is having is the deteriorating condition of the banking space worldwide. It’s quite surprising how one after another bank has collapsed in a matter of 1 month, requiring the regulator’s intervention to be saved.

The reason so many banks are now facing trouble is their bleeding long-dated bonds portfolio due to aggressive rate hikes by the US Fed. The result has also been seen in Nifty Bank which has been following a lower low and lower high formation.

Image Description: Daily chart of Nifty Bank (spot)

Image Source: Investing.com

On 23 March 2023, the Nifty Bank index marked a swing high of 40,201.60, after which it has been trading lower for the second consecutive session today. This price action has essentially marked this above-mentioned swing high as an up fractal. Fractals are very useful for marking support and resistance via swing highs and lows. Now, as long as the index does not break this high, the trend should be deemed to be on the negative side.

Similarly, the previous swing low of 38,613.15 marked on 16 March 2023 is now the down fractal, below which the downtrend will continue. However, for the last few sessions, the index has turned sideways, just like the Nifty 50 index which is a good indication of abating supply. Generally, a trend changes from a downtrend to an uptrend after a period of consolidation and therefore traders need to think twice before going very aggressively on the short side.

However, that does not mean that the up trend has started. If the Nifty Bank index breaks the high marked last Thursday, then long positions can be initiated. So what should be done at the current levels? Probably range trading would be beneficial just as it is giving decent rewards for Nifty 50 traders.

Traders can look to capitalize on the movement between these two fractals, by buying the dips and selling the rallies. The best place to try to go long is around 38,900 - 38,800 while profit booking can be done around the resistance of 40,000 - 40,200. This range can also be used for options selling.

Read More: Weekend Read: A Book Meant for ‘Serious Traders’!

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  • Mandar Kar @Mandar Kar
    banknifty expiry target 38942
    Like 0
  • Ashok Reddy @Ashok Reddy
    May be I think surely bank nifty touches 38700 by tomorrow
    Like 1
  • MOHAMMED ABBAS SAYED @MOHAMMED ABBAS SAYED
    tomorrow 100 % bank nifty positive
    Like 1
    • Ashok jack @Ashok jack
      reason bro
      Like 0

      • Comment Guidelines

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  • NIRAV JARIWALA @NIRAV JARIWALA
    tomorrow down trade start support nifty  16825 so break next support  16225 and up side 17225 support but selling pressure so down side not buy side heavy weight  stock selling presserur nifty down side
    Like 1
  • namami ghosh @namami ghosh
    brilliant insights!
    Like 1
  • namami ghosh @namami ghosh
    brilliant insights, guruji!
    Like 1
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      Thanks, Namami :)
      Like 0

      • Comment Guidelines

      We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

      • Enrich the conversation
      • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
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