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Positive divergence honored.

Yes, Nifty and Bank Nifty both honored the positive divergence, and moved higher in last session.

Now what should be trading strategy?

Ideally, trader should go long on Nifty with a stop loss of previous days low. But from current market price of 5682.55 (spot) low is far below at 5605. In such case I would recommend going long to my readers.

You can buy 5700 CE in the range of 90-95 with stop loss of 69, or you can also buy 5800 CE in the range of 45-50 with stop loss of 25. Nifty will find resistance near 5800 and where we have opportunity to book profit. So don’t expect Nifty to rally sharply from here, but we should also not miss the trade.

Coming on Bank Nifty. Although Bank Nifty has honored positive divergence, but still it trades below its major 200-day EMA, so I would recommend going long immediately. Yes, aggressive traders can look to buy Call options or Sell Puts, but it all depends, how much risk you would like to take.

CNX IT also shows some positive signals, but I sense upside is limited from current level, so better we should not take chance there.

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