Category Archives: Hidden Positive Divergence

Bank Nifty Technical Outlook for 3 June, 13

Bank Nifty Weekly Chart - 12475.65 (-293.70)

Bank Nifty Weekly Chart – 12475.65 (-293.70)

Bank Nifty Daily Chart - 12475.65 (-330.25)

Bank Nifty Daily Chart – 12475.65 (-330.25)

Bank Nifty managed to outperform the market, but due to lack of support from other members it has give up; or you can say others have pulled down. According to Dow Theory, divergence in main indices is a signal to turn alert.

Technical observations from attached chart of Bank Nifty.

  • Last week begin with extreme optimism in market players, that current fall is nothing but just retracement and market will turn positive again; and actually it happened, Monday Bank Nifty moved with enthusiasm and gave positive close. But this euphoria proved short sighted because Bank Nifty struggled to move higher above previous major swing high of 12972, and finally it started giving weak closes.

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Bank Nifty Technical Outlook for 27th May, 13

Bank Nifty Weekly Chart

Bank Nifty as on 24 May’13 – 12769.35 (-547.75)

Bank Nifty as on 24 May’13 – 12769.35

Bank Nifty as on 24 May’13 – 12769.35

From above charts of Bank Nifty, few things I would like to high light here.

  • Week begins with extreme Euphoria and Bank Nifty posted a new life time high of 13414.30. But that was happier moment for couple of minutes, immediate after which Bank Nifty started witnessing profit booking and major draw-down start happening. On same day Bank Nifty closed in red.
  • Even in 2010 when Bank Nifty posted new high of 13303.60 on 5 Nov’10, candle body was very small, it means price activity was very limited, and on next day it started giving up away. It is just like cracking another’s record for sake of putting yours.
  • In the weeks last session, prices made a low 12582.50, but from that level, Bank Nifty witnessed support and on closing basis, it closed with gains compare to prior session.
  • If you see in attached chart, still prices are hovering near trend line.
  • Last week, I had shown you Negative Divergence on weekly chart of Bank Nifty, which was honored. This week I have observed potential Hidden Divergence setting up between prices, if prices honor this divergence than we should be looking for at least retest of the highs.

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