6th Nov ’23 — Show of strength today — PostMortem on Nifty & BankNifty
Nifty Analysis
Recap from yesterday: “On the 1hr TF, Nifty has made an odd-looking W pattern, technically its a bullish sign but we need confirmation of the same by taking out the 19310 resistance soon.”
A look at the chart will make you a believer in technical analysis. We required a gap-up to go past the 19310 because bulls could not win over the bears during trading hours — you could see that on the 2nd and 3rd Nov — read here. Once you have a gap-up, the dynamics change and the bears cede control quickly.
We tested the 19310 support twice, the 1st candle as well as the 11.05 candle. Since it was a rejection — the only way Nifty could go was up. Once BankNifty also started participating, the pace picked up by the afternoon. We did not test the next resistance of 19446 — maybe we will have another gap-up tomorrow at those levels.
This is not the first time Nifty has jumped levels via gap-ups. It has become highly predictable these days. When the big boys do a gap-up, the poor retail trader will have to run for cover. A short covering will further fuel the fire. For tomorrow, I wish to maintain the bullish stance with the first target of 19446 and then 19576. If we are going down, the first level to watch will be 19310.
BankNifty Analysis
The only inspiration BankNifty required today was to open above the resistance zone of 43404. Gap-up open solved that problem. Since that level became the new support, we had a retest at 11.05 — but it was rejected.
The beauty of the trade today was that BankNifty retested the 1st candle high at 15.10 only. And even the final closing was near those levels only. What I am trying to say is the gap-up itself gave a moral boost to the bulls, but not enough conviction. We will get momentum when the bulls beat the bears during trading hours — and since these resistance levels are getting knocked out, that should happen pretty soon.
I still maintain the bullish tone for BankNifty tomorrow, but we need to take out the crucial level of 44063 soon. That is more or less the most important level for BankNifty as of now. 43864 is my first target for tomorrow followed by 44063. In case we are moving down, the first level to watch will be 43404 followed by 43253.
Seems like the party for the Bears ended prematurely. Things were looking in their control till 1st Nov. If we have to fall — we might need a bigger trigger because the quarterly earnings are looking pretty good for the component stocks.