Banknifty closes below 5EMA with a bearish candle formation!

5paisa Research Team

Last Updated: 18th May 2023 - 09:37 am

The Banknifty ended Wednesday's session with a loss of 0.47% as a result it got a confirmation of bearish implications of Tweezer Top candlestick pattern. It also slipped below the immediate support level of 5EMA. However, it took support at the rising trendline for the day. But it closed below the previous day's low. It also closed below the recent swing high. By closing below the 5EMA, it signalled short-term weakness.

The RSI negative divergence clearly emerged now. The MACD has given a fresh sell signal. The distance between Banknifty and it's 20DMA has reduced to 1.31%. The 20DMA is placed at the level of 43134. The Elder impulse system has formed another neutral bar. The RSI has declined and came out of an overbought zone. The ADX is also declined, and the +DMI is below the ADX. The +DMI has formed a negative divergence, showing weakness in the trend.

On an hourly chart, the index declined below the moving average ribbon; it closed within the ribbon at the end of the day. The MACD hourly line is below the zero line and is negative for now. For an uptrend to continue, the index has to clear the 43876-993 zone of resistance. In any case, a close below Wednesday's low of 43446 will be negative, and it can test the level of 43134 (20DMA). Below this, the next level of support is placed at 42582. For now, be with a cautiously negative bias as long as it trades below the level of 44000.

Strategy for the day

The Banknifty closed below the prior day's low and formed another bearish candle. Going forward only a move above the level 43721 is positive, and it can test the level of 43990. Maintain a stop loss at the level of 43647. But, a move below the level of 43680 is negative, and it can test the level of 43400. Maintain a stop loss at the level of 43800. Below the level of 43400, continue with a trailing stop loss.

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