BANKNIFTY has started showing signs of weakness on daily chart. Since early June it has been developing into a Head & Shoulders (H&S) top pattern. A close below its prior low of 44279 can be taken as Confirmation of H&S top. H&S patterns are arguably the most reliable reversal patterns. If this pattern is confirmed and acts as expected, 2000 points to the downside is the potential.
Also, it breached its 50 DMA on Aug 3rd, and the reclaim effort above 50 DMA seems to have failed as BANKNIFTY could not muster enough buying support above the MA (it managed to trade completely above the MA for just 2 days), and since yesterday selling pressure has been pulling it down. After price broke above the MA on April 3rd, and RSI entered its bull zone, above 60, on April 11th, only now (for the last 7 days) did it come below the MA. During mid-June the MA acted as good support but, it is no more the case. Even RSI is breaching its 40 level (to be confirmed on close today) indicating a Range Shift – from upside to the downside.
All in all, the structure is looking weak for the index and caution is warranted for bulls, till a Higher-High is made above 45120 as per the current structure.
Only personal analysis. No recommendation.
Also, it breached its 50 DMA on Aug 3rd, and the reclaim effort above 50 DMA seems to have failed as BANKNIFTY could not muster enough buying support above the MA (it managed to trade completely above the MA for just 2 days), and since yesterday selling pressure has been pulling it down. After price broke above the MA on April 3rd, and RSI entered its bull zone, above 60, on April 11th, only now (for the last 7 days) did it come below the MA. During mid-June the MA acted as good support but, it is no more the case. Even RSI is breaching its 40 level (to be confirmed on close today) indicating a Range Shift – from upside to the downside.
All in all, the structure is looking weak for the index and caution is warranted for bulls, till a Higher-High is made above 45120 as per the current structure.
Only personal analysis. No recommendation.
Raju KMS Datla