Rajandran R Creator of OpenAlgo - OpenSource Algo Trading framework for Indian Traders. Building GenAI Applications. Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Building Algo Platforms, Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in

Bank Nifty Technical Analysis: Imminent Upside with 800-1000 Points Potential – Key Levels to Watch

3 min read

The Bank Nifty chart is flashing several bullish signs, suggesting that an upside reversal is on the horizon. As traders, spotting exhaustion and potential reversals is key to maximizing profits, and the current setup provides a strong case for a short-term rally. Let’s break down the key factors that make an upward move highly probable and discuss the key references to monitor in the days ahead.

Bank Nifty Extreme Indications on the Hourly Timeframe

1. Exhaustion Signals & Extreme Indications

The Extreme Indications oscillator on the hourly Bank Nifty chart has recently dropped to -3 standard deviations, a level rarely reached unless there’s exhaustion in the selling pressure. Historically, such oversold conditions are mean-reverting, signaling that the downside momentum may be coming to an end.

With the oscillator showing green bars, we are witnessing a reversal setup where the market tends to pull back after hitting extreme exhaustion levels. This mean reversion suggests a high-probability rally in the short term, with a potential 800-1000+ point upside move from current levels

Bank Nifty VSA Signals

2. Volume Spread Analysis (VSA) Two-Bar Reversal

Another critical factor contributing to the upside potential is the Volume Spread Analysis (VSA). The VSA on the hourly chart has identified a two-bar reversal pattern with high volume. This pattern indicates the presence of buyers stepping in after a significant downtrend. The increased volume on the second bar further confirms that professional buyers are likely absorbing the selling pressure, which hints at a forthcoming reversal.

The key takeaway here is that strength is returning to the market after the recent downtrend, and this type of dual reversal often brings immediate upside odds in the short term.

Bank Nifty Market Profile Charts

3.Market Profile Context: Temporary Short-Term Selling Pressure

Over the past few sessions, Bank Nifty has shown clear signs of short-term selling pressure. The Market Profile chart reveals:

  • Poor High on 26th September: The poor high on this day, combined with the AB poor high, indicates that the sellers lacked conviction, suggesting that the market failed to complete its auction at higher prices. This type of poor high usually signals that the selling pressure is dominated by short-term participants rather than long-term players. Poor highs also highlight the potential for the market to revisit these levels for a structural repair, meaning that the upside potential is not over.
  • Gap from 26th September: A gap between 54100 and 54300 further strengthens the case for a short-term pullback. Gaps in the market are often filled, as the auction process seeks balance. Therefore, Bank Nifty has a high probability of moving back to fill this gap if the upcoming sessions show strength.
  • 30th September Poor Structure: On 30th September, the Market Profile displayed a poor structure with four anomalies, indicating instability and weak selling pressure. Anomalies like these usually signal that the market might revisit these areas in future sessions to stabilize the structure. These imbalances can often lead to price rebounds, as the market seeks to correct itself.

4. Key References to Monitor in the Short Term

To confirm the upside potential, it’s essential to monitor the following key reference levels:

  • 53250-53300 Support Band: The 1st October low is a critical support zone for the bulls. Holding above this level in the next few sessions will indicate a strong base and the potential for a reversal.
  • 53500 Immediate Resistance: A sustainable move above 53500 will confirm the start of a new leg up. Price acceptance above this level would increase the odds of filling the gap between 54100-54300, as the market seeks to stabilize poor highs and repair the poor structure.
  • 54000-54300 Gap: This gap serves as the primary target for any upside move. If the market shows acceptance and strength above 53500, the gap fill becomes the next logical target. Closing this gap would also complete the auction process from the previous selling phase, aligning with Market Profile theory.

5. Short-Term Strategy: Look for a Breakout Above 53500

For traders looking to capitalize on the potential upside:

  • Entry Strategy: A confirmed breakout above 53500 with sustained buying pressure will likely set the stage for a rally towards 54000 and 54200+ levels. Traders should look for strong volume supporting the breakout as confirmation.
  • Stop-Loss Placement: To manage risk, placing stop losses below the 1st October low (53250) would help protect against any false breakouts or unexpected downside moves.
  • Profit Target: The extreme indications suggest a possible rally of 800-1000 points, which puts the 54000-54300 zone as a realistic short-term profit target.

High Probability of a Short-Term Rally

Given the Extreme Indications exhaustion, the VSA two-bar reversal, and the strong support zones holding, the probability of an upside move in Bank Nifty is high. As long as the 53250-53300 support remains intact, traders can expect a potential rally towards 54000+ levels in the short term.

Keep an eye on volume, price action around the 53500 level, and watch for a confirmed breakout. This setup offers a high-probability trade with a clear risk-reward profile, making it a strong candidate for short-term gains.

Rajandran R Creator of OpenAlgo - OpenSource Algo Trading framework for Indian Traders. Building GenAI Applications. Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Building Algo Platforms, Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in

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