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Bank Nifty Technical Trend Analysis- 26Feb13

, February 26, 2013, 0 Comments

Bank Nifty technically on 8th November 2010 made a life time high of 13281 as can observed on the left hand upper corner of Bank Nifty Daily Chart. On 29th January 2013 at the right hand side of the corner Bank Nifty chart a new high of 12978(yearly high) can be observed.

On the left hand side of the Bank Nifty Daily chart a well modulated downtrend can be observed. The Bank Nifty trend structure in downtrend channel is of lower lows & lower highs. The lower highs within downtrend channel are 11941, 11443 &10080 & the lower lows within this downtrend channels are at 11391, 9987, 8900, 8622, 8235 & 7780.

Technically Bank Nifty bottomed out at 7780 as can observed in the middle of chart around December 2011. In this period Bank Nifty started its uptrend from 7780 & reached 11213 in February 2012 which has been beautifully captured with the help of parallel uptrend lines on the right side, and depicted in chart as uptrend channel (middle to right hand side).

Now within this well modulated Bank Nifty up trend of higher highs 10764, 11748, 12558 & 12900 and higher lows at 9875, 11213, Bank Nifty prices made a recent yearly high of 12900 on 15th January 2013. This was followed by a falling wedge, which initially took support on an uptrend line at 12700 on 25th January 2013, but went till 12960 & then crashed through 12700, 50sma and is now at 12068 on 22nd February 2013 on closing basis.

Bank Nifty price action was getting support from 2 moving average 50 SMA & 200sma.The momentum indicator KST was in over bought zone hinting at reverse divergence but now it has crashed through zero line and is in oversold zone, which means bulls have surrendered at least for now. Bear seems to be gearing up to push Bank Nifty down.

Technical Conclusion: Technically primary uptrend though still intact till 11213 in Bank Nifty, intermediate trend is seems to be down and falling prices coupled with KST indicator going down into over sold zone hints at lower price action in coming weeks.

Invest or not to invest: A positional Bank Nifty short can be held and new can be added below 12000 only with adequate stop loss to protect the capital. Budget week can play spoil sport to both longs and short in Bank Nifty counter.

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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