Bank Nifty faces key hurdle

Bank Nifty (18,721.3)

Both the long and intermediate-term trends are up for the index. However, after marking a new high of 20,907.5 level this January, the Bank Nifty has been on a medium-term downtrend. In early May, the index took support from its 200-day moving average at around 17,500 and bounced up.

It hovers just above its 21- and 50-day moving averages. The indicators and oscillators on the daily chart are trending upwards. But the index faces a key trend-deciding resistance ahead in the band between 19,000 and 19,100. The 50 per cent Fibonacci retracement level of the prior up-move also coincides in this band.

An emphatic breakthrough of this resistance band will have a bullish implications and push the index northwards to 19,500 and then to 20,000 in the short to medium term. Next key resistances are placed at 20,500 and 21,000 levels.

However, inability to break the key resistance band between 19,000 and 19,100 can pull the index down to 18,000 levels initially and then to 17,500. Subsequent supports are placed at 16,600 and 16,250 levels. The key near-term resistance level is placed at 19,000 and support is at 18,300 levels.

Key Event 

The RBI’s monetary policy in the week ahead will be a highlight for the Bank Nifty. A further rate cut can trigger fresh buying and take the index northwards. Any disappointment can pull the index lower. The rupee has been testing the 64-mark over the past one month. A decisive break of this level can weaken the currency. This movement of the rupee can induce fresh buying in IT stocks, in turn pushing the representative index higher.