The index opened much higher than expected but consolidated the rest of the day at the 22400 level (which forms 38.2% retracement
from March's selloff). Bleak chances of the banking index to move any further as it has managed to retrace only 38.2% as compared to Nifty
, which has surpassed way beyond 61.8%. A slight selloff in Nifty
could lead the banking index for a second round of correction. The question then would be if it'll be bigger than the recent one
. On the daily chart
, today formed an evening doji
star right at the resistance levels I had mentioned in my previous post. A mild gap down opening will give a rather lucrative opportunity to bears to capitalize on it and sell further throughout the day to form a perfect reversal pattern, at least for the short term. I'd advise traders with a long position to keep strict stoplosses.
On the upside, if the index manages to sustain above 22500 it might try and test the upper end of the trend channel which lies around 22700. However, a sell with volume
at that level should again confirm weakness in the market. Beyond that 23080 will be quite easily achievable.
On the downside, the index could correct up to 21800-21750 levels. However, bulls might very well put up a tough fight at 22000. If the index fails to breach and sustain below 22000, one
can look at going long for targets of 22400-22500.
: The day could very well end in consolidation within a tight range for premium erosion purposes.