BANKNIFTY made a breakout from 99-day bullish Cup & Handle. During this 14-week period the RRG (Relative Rotation Graph) moved down from ‘improving quadrant’ to ‘lagging quadrant’ and then moved back into the ‘improving quadrant’, thus more or less mimicking the formation of the Cup & Handle. Will this be the beginning of a new uptrend in the Banknifty? The technical structure appears so.
However, the Cup & Handle itself offers some caveats: (1) the depth of the cup is only 8.65%, short of 12% to 30% ideal depth; (2) The handle itself retraced 65% of the cup against the ideal depth of 1/3 to ½ of cup. During the handle formation, including the final breakout, its relative performance to CNX500 is not impressive – it was falling except for the last 2 days.
From the Momentum perspective most of the time (during cup & handle formation) RSI was travelling between 40 & 60 confirming the consolidation, & on breakout it made a 4-month new high after Jan, 4th.
The monthly & weekly structures are bullish & RSI has been trading above 60.
Only personal Analysis. No recommendation.
However, the Cup & Handle itself offers some caveats: (1) the depth of the cup is only 8.65%, short of 12% to 30% ideal depth; (2) The handle itself retraced 65% of the cup against the ideal depth of 1/3 to ½ of cup. During the handle formation, including the final breakout, its relative performance to CNX500 is not impressive – it was falling except for the last 2 days.
From the Momentum perspective most of the time (during cup & handle formation) RSI was travelling between 40 & 60 confirming the consolidation, & on breakout it made a 4-month new high after Jan, 4th.
The monthly & weekly structures are bullish & RSI has been trading above 60.
Only personal Analysis. No recommendation.
Raju KMS Datla