08 Jan ’24 — Nifty Breaks the Trendline This Time — Nifty & BankNifty PostMortem Analysis
Nifty Analysis — Stance Bearish ⬇️
The gap up open today and a thrust upwards gave the false impression that we might have an up day. What happened on the contrary was a breach of the trend line. See the circled portions on the chart. At 09.47 the attempt was unsuccessful but at 10.51 the support gave away. Once we breached it, the price action started to pick up momentum.
The breach of the upper trend line of the ascending channel is quite visible in the higher time frame. Ideally, it is not a pure bearish signal as we are technically still in the bull market. We are changing the stance to bearish from neutral for the ultra-short-term only. If Nifty50 manages to crawl back up the top line — we will have to reverse the stance to neutral. In case Nifty manages to fall further — it will be interesting to see how it reacts to the bottom line of the channel.
BankNifty Analysis — Stance Bearish ⬇️
The chart of BankNifty was more dramatic and powerful. The total swing range was 765pts ~ 1.59%. The support of 47539 was broken only at 14.31 and there was not much time left for the next leg of fall today.
What BankNifty and Nifty have done in January was to take out the stop loss twice. Last week we saw some strong fight back and they managed to get the stance changed from bearish to neutral. And today the tables have turned and the chart looks bearish. BankNifty has walked ahead of Nifty because it has already broken the ascending channel — so the break of support today should give it some more thrust.
The support is only broken on the lower TF, we ran out of time for further action today. This means that the forenoon session will be quite critical tomorrow. If the bears can hold the banks below the 47539 levels — we could see some action picking up. The options flow also indicated an immense short buildup for the CALLS — which may be indicating tiredness in the uptrend. Our stance for tomorrow is bearish.