Wednesday, November 2, 2022

Bank Nifty - Will it Cross 42000 or Time to Get Cautious?

Bank Nifty has continued to inch higher along with Nifty but is it sustainable or time to book profits?

Elliott wave helps us to understand the overall maturity of trend. It is GPS of the market and we are applying it on Bank Nifty as shown below.

Following research is picked up from daily equity research report – The Financial Waves short term update

Bank Nifty daily chart

Bank Nifty hourly chart

Elliott wave analysis – As shown on daily chart we can see Bank Nifty is back towards the previous top made in August 2022. However, this rise is slower and we can see there is no strong trend as ADX is declining which indicates range bound move over medium term.

From Elliott wave perspective prices are moving in form of wave (e) of possible Neutral Triangle pattern as defined in Neo wave. This is usually the last leg of up move before a reversal happens from medium term perspective but price action is important.

Over short term, we can see that the rise is slower as compared to fall in form of wave a. This entire up move is possibly in form of double corrective pattern involving x wave. Channel support is at 40,000 and dips can be used to buy over short term for a move towards 41500 – 41800 levels.

In a nutshell, overall trend for Bank Nifty is up over short term but matured from medium term perspective. 42k is going to be major hurdle. On downside 40k is crucial support, as long as this level is intact one can buy on dips for target of 41500 – 41800 levels.

Elliott wave along with other technical analysis method can act as powerful trading system. This requires a Mentor who can handhold, guide, discuss as the pattern progresses.

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