Bank Nifty trend: There is a possibility of consolidation in Bank Nifty next week. The index will retrace towards the 20-day EMA before entering a new bullish phase. These things were said by Sudeep Shah, Head of Technical Research and Derivatives, SBI Securities, in an interview given to Moneycontrol. Bank Nifty has been the best performer in recent sessions. It is continuously performing better than the broader market. It has made new all-time highs for four consecutive days. This strong growth has indicated the strength of banking counters. This strength has further confirmed their leadership in the current market uptrend.
But this pace slowed down on Friday. The index went below 59,000 due to profit booking. This pullback formed a shooting star candlestick on the weekly chart. This is a well-known bearish reversal pattern that usually forms near the top of an uptrend. The long upper wick is indicating that the bulls initially took the index higher, but the huge supply at the upper levels stopped this advance. This indicates a slowdown in the index.
A look at technical indicators
If we look at the indicators of Bank Nifty, RSI has slipped below its 9-day EMA and both are trending downwards. A clear bearish divergence on the daily chart is pointing towards the possibility of a short-term pause in the rally. Overall, this technical setup suggests that the index may consolidate before taking the next uptrend.
In the near term, the zone of 58,600–58,500 will act as an important support for Nifty. Bank Nifty may fall to 57700 if it goes below 58500. On the other hand, the zone of 59,200–59,400 is very important. Going above 59,400 may end the bearish pressure and pave the way for the index to move upwards.
Federal Bank will rise again after a healthy pause
Meanwhile, while talking about the shares of Federal Bank, Sudeep Shah said that before giving a breakout with heavy volume on November 18, Federal Bank was consolidating in the small range of Rs 239-232 since the beginning of November. After the breakout, the stock remained sideways for three sessions, indicating a healthy pause.
The RSI and ADX have turned flat after a strong up move. This is a sign of consolidation rather than weakness. As long as the stock remains above the breakout zone, its structure will remain positive. If this stock manages to rise above Rs 250 with good volumes, then a new round of bullishness can be seen in it.
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