Banking Index had been a major laggard and has corrected sharply after forming a high near 37700 in February 2021. See the reasons below why this sector is in for some major trouble.
We are showing Neo wave counts along with Ichimoku Cloud that gives an objective way of understanding why Bank Nifty corrected sharply and what to expect next from there.
Below chart is picked up from the daily research report “The Financial Waves Short term Update” giving clear outlook and trade setup on Bank Nifty.
Bank Nifty daily chart:
Elliott Wave analysis: Bank Nifty had clearly broken below the Ichimoku Cloud which is the green shaded area that had protected all the previous fall until recently. The fall had continued even below the Kijun-Sen (base line – red color) and Tenkan-Sen (conversion line – blue color). Up until now the index has failed to even move above the conversion line which can be looked at as a moving average resistance which is plotted in a different way. The resistance of this line is now at 32230 levels.
As prices have decisively broken below the Cloud it also suggest that major trend is probably reversed and any pullback should be temporary.
Neo wave pattern – Neo wave chart also suggest that the entire rise from the lows formed in March 2020 has been in triple corrective pattern and the final leg wave Z is complete. This is in sync with the outlook as per Ichimoku cloud and now a break below the recent lows of 30500 will resume downward trajectory. On upside the conversion line near 32200 followed by base line near 33500 will be the major hurdle to cross for this index. Short term range bound movement can be expected. Pullbacks should be temporary and one can accordingly form trading strategy by looking at simple yet powerful methods of Ichimoku Cloud and Neo wave patterns.
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