CNX-BANK NIFTY--A TECHNICAL VIEW--14-9-2015

CNX--BANK NIFTY

Closed at 16612.60 on 11-9-15.

Support:--16580/16452/16188/15888/15762/15130.35..

Resistance:- 16670.55/16781.55/ 16882/ 17145.

Today it behaved exactly the way nifty has but with a slight difference nifty crossed its previous top of 7846.05 whereas it has failed to cross its previous top of 16781.55 and made a high of 16781.15, so it has made classic double top which indicate that this rally may be over if it fails to cross 16781.55 mark again in 2—3 days time but today’s price action is not supporting it completely, furthermore looking at the daily chart pattern and some other technical parameters it seems that the up movement may still not be over ,so now if it moves above 16781.55 and sustain then this rally may extend further in the range of 16880—17150 before it get exhausted, although weekly and monthly charts are tremendously weak and the long term trend is hugely bearish . Therefore there is no doubt that this on- going up move is a pull- back rally and once it get exhausted in all likelihood the recent bottom of 16192.25 &15762.20 it made on 10-9-2015 & 7-9-2015 will be taken out in coming days/weeks. But development on the daily chart should not be ignored to catch the day to day market movement in time for your own benefit. It is very important to move with the market flow.

There are three reasons why it could move up:-

1.RSI is showing positive divergence on the daily chart, please note that this indicator should be viewed in sync with other technical parameter, which are not supporting it now ,but still you cannot ignore it.

2.It is running above  its lower band of the short term moving averages range which is between 17129—16420(it changes every day).

3.Although it has made double top at 16781.55 but it has also made higher bottom at 16192.25.

 The range for it is between 16420—16782 for 14-9-2015 and breakout on either side from this will decide the further price action. Till it holds 16192.25 level short trade should also be handled with care.

Strategy for Short Calls:-

1.Initiate fresh short call if it sustain below 16670 and then below 16400 with a stop loss of above 16460 & 16700 or  near 16780 with a stop loss of above 16820. One can add on position if it sustain below 16188 with a stop loss of above 16230.

2.Those who are still holding short position will have to be alert and take action  keeping the range of  16420—16782 in mind .

Suggestion

(A)Can cut short position if it maintains above 16670.55 for sometime and re-enter position if it breaks this mark again and sustain with a stop loss of 16700.

(B) It is suggested to square short position if it sustain above 16782 for     5—10 minutes similarly re-enter position if it breaks this mark again and sustain below it

Strategy for Long Calls:-

1.Those who are still carrying position can hold with a stop loss of below 16400 but the authentic stop loss is below 16180 which may please note. Avoid fresh position below 16670.55.

2. Aggressive day trader can initiate fresh trade above 16670.55 with a stop loss of below .

I once again repeat that the pull back rallies shows strength on the face of it but are inherently weak in nature and may end most of the time without giving proper signal, but the price movement has to be respected as it is showing some resilience now and may move up further, even then I would caution long trader to handle their trade vigilantly and with extreme care, because the trend is down and this rally may fizzle out any time.

Remark :- The long term trend is down and I prefer not to go against the trend ,therefore personally I would not like to take advantage of the remaining  expected up move  instead I would look for the opportunity to initiate sell call .

Please note that profit should also be booked in trade from time to time at the appropriate points so that you can take advantage of the market swings.

Kindly note that make your cost your stop loss in favorable  trade and then trail it as the price move up/down to gain maximum profit and avoid losses. Use support and resistance levels as entry, exit, target and trailing stop loss points. DO NOT TRADE WITHOUT STOP LOSS.

Disclaimer:-The view expressed here are solely of the author and he is not at all responsible in any way for the outcome of the trade you enter based on the above view.

Note: Price stated here is of spot market.

Contact me for strategic guidance to enter and exit the trade.