Bank Nifty - Interesting Observation

From a high of 20,900+ levels Nifty Bank fell to lows of 13,500 levels over one year and since then it has recovered most of the losses. In terms of retracement, it has retraced alomst 78.6% of the fall in half the time it took to fall.

Nifty Bank Weekly Chart

In the above chart which is of a weekly timeframe, you can see that 19000-19300 levels are very crucial on the Banking index for these reasons:

i) It is a critical retracement zone,
ii) It is a resistance zone price-action wise,
iii) There is an inside bar formation near this resistance zone

Now, if the index manages to break above 19,300 and give a closing above that zone then bulls can sigh in relief. If the index breaks below 18,550 on spot levels then we could see a major correction set into banking stocks. This could be a strong trend-reversal indicator; this week will be very interesting in terms of price action and could decide the trend for the coming months.

Also, it is well known that in bear markets the prices take half the time to retrace their losses. The pullbacks are sharper and stronger and the fall is slow and long. Do comment your views and let the trading community know of the same.

Note: Nothing in this article should be treated as an advice to trade. DalalStreetBulls or Raghav Behani do not take any responsibilities for any losses incurred due to taking positions based on the inputs provided in this report. We encourage our readers to do their own due-diligence.
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