Bank Nifty Weekly Technical Outlook – 01.08.2020

Price Action Analysis:
Price witnessed a zigzag move in the past four weeks by recording a high at 23212 in the previous week and, in the present week price formed a down bar to close at 21640. In the current scenario we have a down bar after an up bar. With a down bar after an up bar price formed a significant weekly higher swing high at 23212. In simple terms a swing high is simply any turning point where rising price changes its direction to falling price.

The current week down bar is a bearish bar with the close in the lower one third of the range indicating bears in control. The body to range ratio indicates strong bearishness as the position of close is at the lowest 79 percent of the range. The current price bar has large body and the size of the body (1025) is 3.8 times that of the wick ((269) both upper and lower wick combined) indicating strong bearishness with active participation by sellers. The weekly selling pressure (1028) is 3.8 times that of the weekly buying pressure (265). With a bearish PPR price bar and by analyzing the sentiment of the current down bar we form a bearish expectation. The bearish expectation is confirmed only when price breaks the low of the current down bar at 21375. The bearish expectation will be invalidated if price breaks the swing high at 23211 first, before breaching the low at 21375

On a daily time frame price moved from the swing low of 21027 to the high 23212 in the form of an upswing. From the high of 23212 price declined and made a 1-bar swing low at 21611, 1-bar swing high at 22346 and finally price breached the prior 1-bar swing low of 21611 to close at 21640. Price action near the intermediate swing high at 22346 and major swing low at 21027 will be of utmost importance for the upcoming week. The current weekly volatility decreased to 3.6 compared to the previous weekly volatility of 4. The probable weekly returns for the upcoming week is 781 points from the weekly close, with a measured move in increments of 324 points.

Trade Plan
The key level of the existing trend is at 21027 and the critical level at 20926. The point of control of Bank Nifty spot for the upcoming week is in the zone of 22022. Price moving above the point of control can find minor resistance in the zone of 22345 and major resistance in the zone of 22669. Price surpassing the major resistance zone can further move towards the zone of 22992 and 23315.
Price below the point of control at 22022 can find minor support in the zone of 21699 and major support in the zone of 21375. Price breaking below the major support zone can move lower towards the zone of 21052 and 20729.

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