Analysis: Nifty Bank

Its been a while since I have done some analysis on Bank Nifty. So, here is my take on the index.

You can observe the resistance zone on the chart, which is 44150 zone. No wonder this is the previous all-time high of December 2022. Market tried to break this area twice but could not sustain above it. Below this zone it again tried to hold near 44000 round number but then broke down yesterday.

Bank Nifty dropped into a prior support zone 43400 (see on the chart) and today trying to bounce from this area again.

A bearish view from here could be that the previous support zone -- sub-44000 may act as a resistance now. Many people bought around that number and now when it is coming back to that area, they will try to exit at breakeven. Also new traders might short in this area. These sell orders might lead to some reaction from there.

A bullish view could be that market absorbs whatever supply is there near 44000 and goes further into 44150. It could also build this range from 44150 to 44000 to 43400 before deciding its further course.

Only the price action of coming days can tell us what will happen. But I will be cautious near 43900-44000 zone as a buyer and may look for shorting opportunities in the short term.

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Disclaimer: The above idea is not a trading or investment advice. Apply your own due diligence before risking your capital.

Comment:

Market never moves exactly as per our expectations but if our analysis is correct, we can always wait for our setup to squeeze profits out of our trades. Bank Nifty spiked through the resistance zone 44000 and then reacted. Price action was not weak on close above this level but still it could not sustain above it.
Expectations: Down to support level 43400 and it touched that today. Not only it respected the support but also gave a nice bounce from it.
Tip: Never sell at or above support
New Expectations: Range bound scenario mentioned above.

Comment:

The range bound expectations worked well for bank nifty. The 500 points swing with in the range would have definitely benefitted some of you.
Further expectations: Range continues. I look for pin bars (at least on 15min) at or near the edges of the range and grab those opportunities
If range breaks decisively without any pinbar, at those levels, then I wait for a retracement to take trade.
Applicable on both buy and sell.

Comment:

We are still in a range specified above (43400-44150). There are two possible scenarios from here. The bullish scenario which can take it to 44500-600 and the bearish scenario which can take it down to 42700 and then may be 42200. Both depending on how the range breaks and further price action.