It was a week of consolidation for Bank Nifty. The week started with a gap-up opening on Monday; however, thereafter prices remained confined within a range of nearly 1,000 points, with no significant directional move on either side. Bank Nifty eventually ended the week tad below the 57,700 mark, registering gains of around 1.53% over the previous week’s close.

Although the index posted decent gains for the week, it largely appeared to be a breather phase for the bulls when compared to the strong rally of over 4% witnessed during the previous week. Most of the gains were accrued through the gap-up opening at the start of the week, following which prices traded with a series of small-bodied candles on the daily chart. This has translated into a classical Doji formation on the weekly chart, which typically indicates indecision. However, despite the formation, we continue to maintain a positive bias considering the strength of the broader technical structure. During the week, Bank Nifty closed above the April swing high of 57,456, thereby confirming a major Higher Top–Higher Bottom formation on the daily chart. In addition, prices have also managed to sustain above the long-term 200DSMA, which had acted as a formidable resistance during the April rally. This development indicates strengthening bullishness across multiple timeframes. The moving average structure has also turned favorable. During the week, the index witnessed a bullish crossover between the 20DEMA and 50DEMA, with the 20DEMA also approaching a crossover above the 89DEMA. These developments further reinforce the positive undertone. Another encouraging sign is that Bank Nifty is now sustaining comfortably above the 61.8% retracement of the entire decline from the all-time high of 61,679 to the recent low of 49,955, indicating that the primary uptrend has resumed. Having said that, the banking space has already delivered strong returns over the past few weeks, and momentum indicators are now in the overbought zone. Therefore, instead of chasing prices at higher levels, a buy-on-dips approach would be more prudent. As far as levels are concerned, the bullish gap left this week near the 200DSMA is likely to act as an important support zone in the range of 57,000–56,700. On the upside, the 58,500–59,500 zone is seen as the next key resistance area based on retracement projections and gap theory.

Rajesh Bhosale, Technical Analyst, Angel One