For the week, Bank Nifty closed below 46,000. What trading plan need to be in place on Monday?

For the week, Bank Nifty closed below 46,000. What trading plan need to be in place on Monday?

With the Bank Nifty at a turning point and remaining stable below 45,800, prices will be under pressure to fall down to 45,500 or less.

Bank Nifty ended below 46,000, and the Nifty continued to fare poorly

In comparison to Nifty, Bank Nifty has underperformed, and on February 2, prices are showing a "bearish" trend. The mid-Bollinger Bands show rejection from higher levels. Bank Nifty is still 2,000 points off its record high, even though Nifty has managed to reach a career high. We have not witnessed a single closing below the previous candle low throughout this whole rally from the bottom at 44,429 in our analysis. A closure below the 'Bearish Engulfing' pattern's bottom, at 45,900, will now indicate the start of a bearish trend.

Short-term charts show that the Bank Nifty has support around 45,700 levels. Should this level be broken, a decline to 45,050 is likely. A significant upward barrier for the index is located around 46,500. The index could continue to be under pressure as long as this is true.

The call and put open interest trends are shown on the Bank Nifty Open Interest Profile chart. The red shade on the right represents Put Open Interest, while the green (fluorescent) shade on the left represents the change in Call Open Interest from the day before. As we can see, there is a significant build-up in call side open interest at 47,000 and 46,500, indicating that these levels may serve as significant barriers.

This indicates a reduction for both calls and puts at 46,000 open interest. Put sellers may now get alarmed and cover their bets if the Bank Nifty closes the day below 46,000. Price pressure might result from this.

In addition, the hourly chart indicated that prices were moving within an upward-sloping channel. The strong increase on February 2 encountered resistance close to the channel, after which prices swiftly declined to the channel's support. The index will be under further pressure if there is a clear breach below the channel support at 45,800, since this would break the trendline support.

Know Sure Thing, or KST, is a momentum indicator that functions similarly to other indicators such as the Moving Average Convergence Divergence, or MACD. KST, however, does not lag behind MACD. Since it is now close to the signal line, any pressure on prices will also cause negative signals to appear on this indicator.

In summary, the Bank Nifty is at a turning point, and prices will be pressured to go towards 45,500 or lower if they remain stable below 45,800. This indicator has to rise over 46,500 in order to maintain its bullish trend.

Trading Strategy: Short bets in Bank Nifty Futures may be opened below the 46,000 (futures) levels; 46,450 is anticipated to be the upward barrier and 45,350 to be the downside.