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The Bank Nifty index jumped 3.7 per cent last week, moving out of the narrow range-bound movement between 21,400 and 21,800.
On Tuesday, the index surged in early hours and recorded a new high of 22,492. But after witnessing selling pressure, the index started to decline giving away its intra-day gains and is currently trading at 22,349 levels. The index faces resistance ahead of 23,500 levels.
With the daily relative strength index hovering in the overbought territory, a corrective decline can’t be ruled out at this juncture. Any corrective decline in the Bank Nifty can find support at 22,000 initially and then at 21,800 which is the key base level.
Subsequent upward reversal needs to breach the immediate resistance level of 22,500 decisively. Next short-term targets are at 22,750 and 23,000 levels.
Traders with a short-term perspective can buy in declines as long as the index trades above 22,000 with a fixed stop-loss.
Nevertheless, a strong plunge below 21,800 will start strengthening the bearish momentum and will pull the index down to 21,500 or 21,400 in the short term.
Conclusive fall below 21,400 will alter the short-term uptrend and drag the index down to 21,000 and then to 20,700 levels.
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