BANKNIFTY [5th August 2020]

scalp3r240 Updated   
The index clearly does not want to breach 21100, confirmation from a 2nd attempt today, and the rally was fueled further with minor short covering leading it to the crucial level of 21600, with a subsiding momentum. FIIs remained net buyers in both Cash and Index Futures today. The MPC meeting tomorrow will decide the trend of the market for August. In case it fails to give more than what is expected, the journey southward will continue. However, it is worthy noting that the Stochastics on the Daily chart is at an extremely oversold zone and turned slightly positive today, with a, possibly, harami pattern. Ample chances for today's momentum to continue tomorrow. I'd advise traders to be a little cautious given the sudden volatility that the index witnesses on RBI policy meets.

On the upside, a decisive breach of 21650 will lead the index to 21800-22040. A positive surprise by the MPC might even take the index higher towards 22250-22400, negating the correction altogether.

On the downside, the index might try and take support at 21375-21222. Below 21200, the index will try and test 21030 for the fourth time, and might very well breach it this time to complete its retracement of 38.2% to 20880.

The expiry range, as of now, remains between 21000 & 22000.
Correction: The RBI policy meet is on tomorrow (6th Aug) and not today. However, the levels mentioned hold. Market might consolidate ahead of the decision on interest rates with a positive bias.

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