On the monthly chart, the index has bounced every time it has entered in ‘Ichimoku’ cloud area. It first entered cloud area in 2008-2009 after which it witnessed a fresh high life level.
BankNifty has seen strong correction from 32,000-odd levels towards 16,000-17,000 levels in the last few months. The sector has been constantly under pressure and was the prominent reason for Nifty50 failing to scale higher levels.
After a strong jump in the last few days, it has raised hopes of bulls.
On the weekly charts, the index has formed a ‘C clamp’ which generally works on the principle similar to overbought/oversold zones but based on Ichimoku studies. This pattern reflects the possibility of the index touching 23000-24000 levels in the coming weeks.
The index has also formed a bullish dragon harmonic pattern which is a reversal pattern in nature. In addition, it can also be called a pattern which has a tendency to culminate in a completed harmonic bat pattern. Thus the targets for dragon patterns are significantly higher with the possibility of attempting previous high levels.
(The author is AVP-Technicals and Derivatives at LKP Securities)
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