CNX--BANK NIFTY-UPDATE FOR THE WEEK STARTING FROM 28-9-15

CNX--BANK NIFTY

Closed  at 17196.65 on 24-9-15.

Support:-- 17174/17100/16969/16759/16670/16484/16192/15762.20.

Resistance:- 17246/17502/17542.90/17569.80/17602/17719/17738.

It opened on a negative note at 17206.10 and made a high of 17283.10 and a low of 17070.55 before closing the day at 17196.65. Despite September-2015 series settlement it had an unusually quiet day today may be because of the ensuing event of RBI’S trade policy announcement which is slated for 29-9-2015. Technically it hangs in balance now and the said RBI’S event outcome will decide further price action, however if rate cut happens it can shoot up for a while but how long will it sustain the rise has to seen. Since the long term trend is down in all likelihood it may slide after the event gets over. In view of this it is suggested to keep your trade commitments light. There are some important technical observations which are given hereunder and the under noted parameters would drive the market movement for the coming week/weeks.

TECHNICAL  OBSERVATION

1.Inverse Head & Shoulder pattern is visible on daily bar chart and its neckline is in the range of 17700--730,since it is rising neckline ,so its count will increase day by day. The said range of neckline is valid up to 9-10-15,so if it moves above this range and sustain then the possible maximum target could be in the range of 19300—19500.

2. RSI is showing huge negative divergence on the weekly and monthly chart, which is a bad sign. It has to be reviewed from time to time and seen in sync with the other technical parameters.

3.It is below all its long term moving averages and the last being at 17565(it changes every day) for 28-9-2015.So it will only show positive strength if it moves above this mark and sustain.

4.Fresh short term rising trend line support is at  following points(approx) for coming week. Break below this support on given day will give first sign of crack.

    28-9-15—16940 / 29-9-15—17025 / 30-9-15—17115 / 1-10-15—17220.

5. Short term moving average range for 28-9-15 is between 17147--16803.

6.Its recent higher bottom on the bar chart is at 16759made on 23-9-2015.

7.It made a lower top on the line chart at 17255.30 on 23-9-2015(bad sign) but has not made lower bottom as yet and the recent bottom is at 17031.15 made on 22-9-2015.

In view of the above technical observation the broad range for Bank Nifty is between 17730---16759 and it is almost evenly placed now and breakout on either side will decide which way it want to move but in totality the bias is bearish and down move is expected, it will give first crack when the rising trend line is violated and then the recent bottom of 17031.15 on the line chart and bottom of 16759 on the bar chart is taken out similarly if it moves above 17565(it changes every day) and sustain then it will show strength and beyond 17730 mark it can show good up movement. I light of RBI’S event traders should be circumspect in their trade position and it is better to avoid aggressive trade now on both sides till the event is over.

Trading Strategy 

1.Long call can be tried above 17260 or above 17311 with a stop loss of below 17 140 & 17240 respectively. It would be slightly safer to try it above 17311.

2.Can buy now also but not below 17147 with a stop loss of below 17030. It could be a risky trade.

3. Since it had made lower top on the line chart Short call can be tried below 17255 with a stop loss of above 17320 and below 17030 for sure with a stop loss of above 17150, aggressive trader can try short call on the rise to around 17565 but not above this  mark with a stop loss of above 17660.

Remark:-The long term trend is still down. In view of RBI’S trade policy announcement trade commitments should be kept light, in fact for safe trader it would be better to stay away from the market till the RBI event is over. However aggressive day trader can initiate trade as suggested above. I would personally avoid long call till it moves above the long term moving average last point and sustain instead I would look for opportunity to initiate short trade for now.

                                                                                          

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.