Bank Nifty's MACD and RSI indicators signal caution for traders!

5paisa Research Team

Last Updated: 11th May 2023 - 09:25 am

Bank Nifty closed down by 0.20% after opening with a positive gap, while the PSU Banks witnessed the profit booking on Tuesday.

The Index traded in Friday's range for the second consecutive day. Though it has not given any decisive weakness signal as the index is trading above its key moving averages, that said some of the leading indicators are showing a potential decline is likely. The MACD line is about to move below the signal line. Because of this, the histogram has developed, and negative divergence is the most trusted one and indicates a possible correction. The MACD on the hourly chart has given a sell signal, and the RSI is in a neutral zone. On Tuesday a majority of banking stocks declined. Axis and HDFC Banks saved the Index from a big decline. For now, the 43534-580 is a crucial resistance zone. On the downside, it may test the level of 42600, however, for this to happen, the index needs to close below the prior day's low. It is time to stay neutral and pay close attention to levels mentioned.

Strategy for the day

The Bank Nifty ended down by newly 300 points from the day's high and it formed a bearish candlestick pattern. It also closed in the moving average ribbon on an hourly chart. A move above the level of 43245 is positive for the index, and it can test on the upside the level of 43470. Maintain a stop loss at the level of 43155. Above the level of 43470, continue with a trailing stop loss. But, a move below the level of 43155 is negative for the index, and it can test the level of 43000 on the downside. Maintain a stop loss at the level of 43245. Below the level of 43000, continue with a trailing stop loss.

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