Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

Sector-Wide Selling in Banking Stocks with Engulfing Pattern

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Bank Nifty Futures today had a bearish engulfing day with the sector-wide sell-off. Since May 18th Bank Nifty futures is trading a broader range 17000- 22000 and Bank Nifty has broken the range on Tuesday followed by a bearish engulfing pattern.

Bank Nifty Daily Charts

Sector-wide sell-off is seen in this counter and formed a look above the balance and fail scenario. Any follow thro selling is considered as a potential positional trade setup. Among the entire pack ICICI Bank and IndusInd Bank is the largest loser for the day and lost more than 7%.

Except Bank Baroda, entire banking pack ended up in the negative mode.

Implied Volatility in Bank Nifty shot up and ATR volatility too elevated with ATR levels spiking above 900+ as shown below. And Intraday volatility is at its best with 700-1200 points of intraday fluctuations.

On the Newsfront, The Union Cabinet on Wednesday decided to bring all co-operative banks under the Reserve Bank of India through an ordinance.

This will ensure depositors under urban cooperatives and multi-State cooperative banks, which are 1,540 in number and have a depositor base of 8.6 crores will be protected. This measure will provide adequate control to RBI to supervise and to protect the depositors.

Government banks, including 1,482 urban cooperative banks and 58 multi-state cooperative banks, are now being brought under supervisory powers of Reserve Bank of India (RBI).

The Cabinet also approved a scheme to provide interest subvention of 2% for a 12-month period to small borrowers with loans up to ₹50,000 under the Shishu category of the Pradhan Mantri Mudra Yojana

Bank Nifty Market Profile Charts

From the Market Profile perspectie. Bank Nifty formed a strong Open rejection reverse completely engulfing the previous days value area with major resistance around 22400 levels.

Immediate short term resistance comes around 21700 and the next major support zone is 20500-20700 levels. Short term sentiment will turn down is the price starts accepting below 21700 levels in a very short term.

Sell on Rising markets is the theme one needs to play in a very short term positionally towards 20500 levels. Higher odds that today’s activity could result in both short term as well as a medium-term trend reversal.

Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

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