A BROAD TECHNICAL VIEW ON CNX--BANK NIFTY FOR THE WEEK STARTING FROM-- 8.6.2020

CNX--BANK NIFTY

Open-20516.40--High-21198.70--Low-20425.05—Close-21034.50 on 5.6.2020

Support:20995/20820/20530.45/20324/20184.10/20122.25/20010/19852/19728.90/19586/19515/19455.55/19358.05/19051/19010/18941/18703.45/18252.43/18100/17938/17719/17606/17311.25/17286.40/17248.48/17143/17105/16826/16450/16193/16116.25/15879.55/15626/15440/15157/14853.

Resistance:21122.10/21348.15/21462.40/21619.55/21670/21967/22380/22418/22469/22996.40/23609.40/23822/23923.30/24045/24240.

WEEKLY RANGE:--21619.55---20530.45----20010----19632.90.

 (Bold and underlined figures are most important)

 It gave more than 2300 points rise in the preceding week. It did give small correction yesterday but resumed the up momentum again today. You are already aware that it has opened the upside up to 22418(see my post for 5.6.2020) and sustain close above this mark will open the upside up to 24370 levels. It is exhibiting reasonable strength on the technical chart but a lot less than what CNX-Nifty is showing because it is way below its long term moving averages on the daily & weekly chart now, may be it can catch up with Nifty’s momentum in days to come and move sharply ahead. But it is important to mention here that recent price surge is not in sync with the fundamental which is most surprising and does not give enough confidence to the traders in the ongoing up move. But the technical parameters are good, so further rise cannot be ruled out, so ride the rally till it shows visible sign of weakness. Since the price movement has total disconnect with the fundamental and it is a liquidity driven rally therefore sooner or later price has to rationalise because it is the fundamentals which holds the price line eventually. So be careful that this rally can trap the traders unaware at higher levels. 

In view of the above observation short term trend looks up, therefore long trade can be tried on dips or otherwise too but moving up it will face stiff hurdle at 21620---21967---22418---22690---23640---23930---24230---24365---24761---24960, it has to really toil hard to match  up its momentum with Nifty. But as this is a technical and liquidity driven rally and has no connect with the fundamentals so this rally can culminate also at any of the above mentioned points, so be alert, vigilant and cautious in the long trade because the day correction sets in it could be devastating. Similarly moving down it will have strong support at 20995--- 20530.45---20010, sustained break below 20530.45 would be an alert sign and sustained break below 20010 on the closing basis will indicate that it could go in for deep correction. I suggest that since it is technically good now therefore do not try to go for instinctive short trade but one should definitely attempt short trade at the critical range or on the price breakdown.  

NOTE: - If it opens up with huge gap up then wait for it to settle down before initiating long position. But short trade can be attempted on huge gap up if it is near the selling point. Since, it is showing volatility so any type of trade should be squared off during the day, if you don’t have reasonable profit margin in the trade.

TRADING STRATAGY

1. Buy on decline near but not below 20530.45 with a stop loss of 20370.

Or

   Buy if it maintains above 21619.55 for some time with a stop loss of 21500.

2. Sell on the rise near or within the range of 22600(S/L-22750)---24500(S/L-24650)---26500(S/L-26600.

Or

Sell if it does not move above 21620 in first two hours of trade with a stop loss of 21700.

Or

Sell if it maintains below 20530.45 for some time with a stop loss of 20650.

Or

Sell if it maintains below 20010 for some time with a stop loss of above 20120.

Remark: - The long term trend is still down. The Short term trend is  up so long trade can be tried as suggested above but with extreme caution as this up rally is not fundamentally backed therefore chances are that it may end  abruptly also. Therefore short trade should also be attempted as suggested above. The short term bias is up.    

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.

Kindly note that make your cost your stop loss in favourable  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.

 

Note: Price stated here are of spot market.

 

Contact me for strategic guidance to enter and exit trade.