Bank Nifty: Key Support and Resistance Levels to Watch Out for on Wednesday – 24 April 2024

Bearish Candles on the Daily Chart

On Tuesday, the Bank Nifty formed a back-to-back “open=high” candle, indicating a negative trend. Since the closing price was lower than the opening level, it created a consecutive bearish candle on the daily chart. However, despite these bearish indicators, the index has maintained its pattern of higher highs and higher lows for the third consecutive day. This suggests that while there’s a downward bias, the overall trend is still upward.

Declining Volume and Stiff Resistance

Although the index has shown gains over the past three days, it closed below the opening level in the last two, forming bearish candles. The volume during these sessions was significantly lower than the previous days, indicating reduced market activity. This declining volume pattern has persisted over the past week, which could be a sign of weakening momentum. Additionally, the opening downside gap area of April 15 is proving to be a stiff resistance point, limiting upward movement.

Bollinger Bands and Hourly Chart Signals

The contraction of the Bollinger Bands suggests limited upside potential, indicating a possible consolidation phase. The hourly chart reveals that the index has formed lower highs and closed below the first-hour low, which is another bearish sign. With the upcoming monthly expiry, market volatility is likely to increase, adding to the uncertainty. The hourly Moving Average Convergence Divergence (MACD) is also about to give a bearish signal, further reinforcing the negative sentiment.

Key Levels to Watch

If the index manages to fill the April 15 gap area by reaching 48,636, there could be additional upside potential. However, if it closes below the 20-day moving average (DMA) at 47,432, a further downward move is likely. The 50 DMA support is positioned at 46,886, serving as another critical level to monitor. Traders should also watch the rollovers for directional bias as they may indicate broader market trends.

Strategy of Bank Nifty

Given the current market conditions, traders should approach the Bank Nifty with caution. Here’s a suggested strategy for navigating this environment:

• If the Bank Nifty moves above 48,000, it could test 48,255. In this case, maintain a stop loss at 47,880 and continue with a trailing stop loss above 48,255.
• If the index drops below 47,900, it could test 47,640. In this scenario, maintain a stop loss at 48,000 and use a trailing stop loss below 47,640.

These levels and signals are critical for making informed trading decisions in a volatile market. Stay vigilant and adapt your strategy as market conditions evolve.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.