We're starting to see some weakness in the BN, as expected. So a bearish tone today. But more importantly, there will be some volatility as traders position themselves for next week.
Since nothing much is happening today, we can take a step back and look at the big picture. A look as far back as almost a decade, yes... 10 years. And you can see how the bank nifty has moved since, within a trendline band.
Fascinating, that despite the 2020 corona crisis, which was albeit extreme and a great time to buy, we have kept ourselves within this range. And if I take the lowest point from 2016, its almost a perfect channel
Even if I were to take the approach of trying to include the maximum number of points (which is a better way of looking it), the range persists:
And if you go by this, you'll notice that the BankNifty rarely hits the lower part of the channel, it's always in the upper range. Yes, there are periods where it is outside the channel, but that is what reversion to the mean brings about.
In this case, however, the reversion is the middle of that channel, but never the lower half.
Okay, so this is what technical analysts do. They perform a sort of intellectual masturbation with charts. It makes them feel good, and confident of their skills.
But none of this counts, what counts is whether you're making money. Yes/No.
The question to ask yourself is what is more important to you, being right or being rich?
And that my friend is what separates the boys from the men.
So, we've finally reached the gap, will it fill is what we need to see. Given what we saw yesterday, where we have a good straddle at 45000 from the options volume, it could be held as support.
- Though do notice increase in selling volume, that's because its a crucial point. This line will be defended.
A base is forming around the gap fill, will it hold?
(My guess is it will bounce for today, then we'll see a push up, and possibly a short covering before EOD. And after that, when Monday arrives, we see a gap up / down, before trending back down to fill the gap.)
And as mentioned above, here's where we are at 230... trying to break the VWAP and 45000 level.
If we remain below the 45000 level, we could see the start of a downward trend.
The gap has not been closed. I'm wondering if the market fails to break the VWAP line (black), it could be a drop towards the bottom of the gap. If that happens, then we'll see on Monday if it goes sideways.
The market likes to make fools of the most of us, including yours truly.
And so we see the markets not being able to move higher! Again, resting at the gap fill area. Ideally, I would like to see this gap fill, but even if it did, there are still a few more below, all the way to 40000!