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Bank Nifty Technical Trend Analysis

, January 28, 2013, 0 Comments

Bank Nifty makes new highs every week and touched a yearly high of 12908 on 15th January 2013.Technically 13281 of 8th November 2010 is a lifetime high in Bank Nifty daily chart as one can observe on the left hand upper corner of the bank nifty daily chart.

After a high of 13281 on 8th November 2010 a well modulated downtrend can be observed on the left side into a downtrend channel. Bank Nifty trend structure in downtrend channel is of lower lows & lower highs as can be observed with lows on trend lines from left to right. Lower lows within downtrend channels are 11391, 9987, 8900, 8622, 8235 & 7780. Lower highs within downtrend channel are 11941, 11443 &10080.

Technically Bank Nifty bottomed out between 8235, 7780 & 8973. In this period Bank Nifty started its uptrend which has been beautifully captured with the help of parallel uptrend lines on the right side, and depicted in chart as uptrend channel. On the right hand side of the Bank Nifty daily chart within uptrend channel a high of 11213 can be observed which lead to a small downtrend channel, with support on the previous downtrend channel at 9826 and a low of 8973. (Centre of Bank Nifty daily chart)

Again a well modulated Bank Nifty trend of higher highs 10764, 11748, 12558 & 12900 and high lows at 9875, 11213 in uptrend channel can be observed. Bank Nifty prices made a recent yearly high of 12900 on 15th January 2013 and a falling wedge can be observed while taking support on a trend line at 12693 on 25th January 2013.

In a well modulated uptrend within the uptrend channel, bank nifty price action is also getting support from 4 moving average 13ema, 34ema, 50 sma & 100sma. Bank Nifty rally along with rising volume within an uptrend channel hints that bulls are participating heavily.

The momentum indicator Slow stochastic has reached the extreme of 100, which could indicate a very powerful move underway. And with bank nifty price action consistently closing near its high, with slow stochastic pull back at 60 hints that bulls have not given up as yet.

Technical Conclusion: Technically uptrend in the counter will help bulls and falling wedge at slow stochastic at 60 indicate a pull back and retesting of old highs sooner rather than later.

Invest or not to invest: A positional bank nifty long can be added with a strict stop loss, but on  fall below 34 ema short trade can be generated again with a adequate stop loss. Shorts should be adequately protected as the strong trend is up.

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About author
Suchita holds a Bachelor of Science Degree from MSU University, Baroda, Diploma in Financial Management from Xavier's Institute of Management, Mumbai and has undergone Comprehensive Program on Technicals Analysis from Bombay stock exchange. ...more