Bank Nifty Monthly Technical and Seasonality Outlook - August
Price Action Analysis:
BankNifty recorded an all-time high at 32614 in the month of December 2019. From the all-time high price declined in a three leg down move to and recorded a new low at 16116. From the low of 16116 price retraced in three leg up move with a swing high at 21967, swing low at 17105, a higher swing high 23212 and to finally close at 21640.
Each bar has a story behind it. A price action practitioner should understand the true essence when interpreting a price bar, then only he or she will be able to see the reality of price, else will end up with just an illusion. So now let’s look at the story behind the current month price bar structure.
Price opened near the previous close, then surpassed the previous high, and made a new high indicating bulls in control at one point of time. But then, bears overtook the charge from bulls and pushed the price towards the low and closed in the lower one third of the range but slightly above the open resulting into a bearish pin bar. The size of body is just a thirteenth part of the range. The size of wicks (both upper and lower combined) is 6.5 times greater than the size of body. The size of the upper wick is 4.8 times the size of the lower wick. The selling pressure is almost 2.5 times that of the buying pressure. Even though the current bar is a bullish bar but a small body and a large upper wick indicate a weak bullishness with a possible turnaround in the existing direction of price. The close, body, wicks, buying pressure and selling pressure indicate a possible turnaround or in other words, with a bearish pin bar we form a bearish expectation. The bearish expectation will be confirmed only when price break the low of the bearish pin bar at 21027. With a monthly and weekly close falling in line price formed a weekly bearish PPR price bar. (For further detailed insights you will have to wait for the weekly technical outlook which will be published by 02.08.2020)
The current month volatility of BankNifty is at 15.2 and the annual volatility at 52.8.The probable monthly returns is of 3303 points from the monthly close, with a measured move in increments of 546 points.
Stock Market Seasonality
Seasons are caused by the fact that the Earth is tilted on its axis by 23.5°. With seasons we have Equinox and Solstice. A solstice is the point during the Earth's orbit around the sun at which the sun is at its greatest distance from the equator, while during an equinox, it's at the closest distance from the equator.
The summer solstice occurred in June and the autumnal equinox is due in the month of September. With the end of summer solstice we derive the semiannual seasonality levels. The price levels of 21762 acts as the semiannual seasonality level for BankNifty. Currently price is trading at 21583 which is below the semiannual seasonality levels of 21763. Price action near the zone of semiannual seasonality will be of utmost importance in determining the future direction of price which will be valid till the end of upcoming winter solstice.
Trade Plan
The point of control of BankNifty Spot for the month of August is in the zone of 22120. Currently price is trading below the point of control and hovering near the minor support zone of 21574. Price surpassing the point of control can find minor resistance in the zone of 22666 and major resistance in the zone of 23212. Price surpassing the major resistance zone can further move towards the zone of 23758 and 24303.
Price staying below the point of control at 22120 can find minor support in the zone of 21573 and major support in the zone of 21027. Price breaking below the major support zone can move lower towards the zone of 20481 and 19936.
Disclaimer
All trade ideas published are for educational purpose only. All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, or individual’s trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.
BankNifty recorded an all-time high at 32614 in the month of December 2019. From the all-time high price declined in a three leg down move to and recorded a new low at 16116. From the low of 16116 price retraced in three leg up move with a swing high at 21967, swing low at 17105, a higher swing high 23212 and to finally close at 21640.
Each bar has a story behind it. A price action practitioner should understand the true essence when interpreting a price bar, then only he or she will be able to see the reality of price, else will end up with just an illusion. So now let’s look at the story behind the current month price bar structure.
Price opened near the previous close, then surpassed the previous high, and made a new high indicating bulls in control at one point of time. But then, bears overtook the charge from bulls and pushed the price towards the low and closed in the lower one third of the range but slightly above the open resulting into a bearish pin bar. The size of body is just a thirteenth part of the range. The size of wicks (both upper and lower combined) is 6.5 times greater than the size of body. The size of the upper wick is 4.8 times the size of the lower wick. The selling pressure is almost 2.5 times that of the buying pressure. Even though the current bar is a bullish bar but a small body and a large upper wick indicate a weak bullishness with a possible turnaround in the existing direction of price. The close, body, wicks, buying pressure and selling pressure indicate a possible turnaround or in other words, with a bearish pin bar we form a bearish expectation. The bearish expectation will be confirmed only when price break the low of the bearish pin bar at 21027. With a monthly and weekly close falling in line price formed a weekly bearish PPR price bar. (For further detailed insights you will have to wait for the weekly technical outlook which will be published by 02.08.2020)
The current month volatility of BankNifty is at 15.2 and the annual volatility at 52.8.The probable monthly returns is of 3303 points from the monthly close, with a measured move in increments of 546 points.
Stock Market Seasonality
Seasons are caused by the fact that the Earth is tilted on its axis by 23.5°. With seasons we have Equinox and Solstice. A solstice is the point during the Earth's orbit around the sun at which the sun is at its greatest distance from the equator, while during an equinox, it's at the closest distance from the equator.
The summer solstice occurred in June and the autumnal equinox is due in the month of September. With the end of summer solstice we derive the semiannual seasonality levels. The price levels of 21762 acts as the semiannual seasonality level for BankNifty. Currently price is trading at 21583 which is below the semiannual seasonality levels of 21763. Price action near the zone of semiannual seasonality will be of utmost importance in determining the future direction of price which will be valid till the end of upcoming winter solstice.
Trade Plan
The point of control of BankNifty Spot for the month of August is in the zone of 22120. Currently price is trading below the point of control and hovering near the minor support zone of 21574. Price surpassing the point of control can find minor resistance in the zone of 22666 and major resistance in the zone of 23212. Price surpassing the major resistance zone can further move towards the zone of 23758 and 24303.
Price staying below the point of control at 22120 can find minor support in the zone of 21573 and major support in the zone of 21027. Price breaking below the major support zone can move lower towards the zone of 20481 and 19936.
Disclaimer
All trade ideas published are for educational purpose only. All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, or individual’s trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.
