Bank Nifty can Lead the Nifty to an All-Time High

Aug 11, 2022

Brijesh Bhatia, Research analyst

Banking stocks are getting ready for big breakout. My charts tell me that the Bank Nifty index is ready to lead the next leg of the rally in the market.

In fact, I believe the Bank Nifty can lead the Nifty to a new all-time high.

And in this video, I'll show you why.

Watch the video and let me know what you think.

Hello subscribers. Welcome to the Fast Profits Daily. Myself Brijesh Bhatia.

Markets have come back very, very strongly from the reversal levels where we have highlighted that fear is at an extreme. And in case you missed that video, you should watch that video in the archives where I highlighted that markets are at extreme fear levels and Sensex and Dow Jones are indicating a time to buy.

Well, coming on to this today's video, I’ll be discussing about Bank Nifty. I think Bank Nifty could lead the way for the markets towards the all-time high which is 18,600 on the Nifty.

 

Let's start with the weekly chart, the first weekly chart over here. We have a trendline if you look at the black line over here. The trendline break out was right after a long, long time and this trendline breakout is as per the time cycle is very, very crucial for me because it has completed around 39 weeks'

38.2 is a Fibonacci number. I've been a practitioner of Fibonacci for more than a decade now. The Fib time cycle plays an important role. Being at the 39 weeks break out, it highlights to me that the structure is very bullish.

If you look at the lower panel over here, the bullish crossover of MACD with the histogram moving about the integer line, it indicates that the momentum supports breakout levels on the higher side. It is not the first time that the similar scenario has happened when the breakout happens with positive crossover and the histogram going positive.

 

Look at the second chart here and look at back in 2008-2009 when the trendline breakout happened, look at the lower panel where I've marked the blue arrows, MACD was in the oversold zone with positive crossover and the histogram above the integer line. This repeated in 2016-17 and it's repeating in 2022 as well.

So it's a saying in technical analysis that history repeats itself and that's what exactly happening on the Bank Nifty.

Look at the rally in 2009. Look at the rally in 16-17. We saw a superb really coming on, though it will not be the straight line, the bullish trend. There could be dips and you should definitely look for a buy on dips strategy.

 

If I look at the top down approach and move on to the daily chart over here, look at the black similar line where the trend line breakout happened. If you look at the green box, the runaway gap has been seen on the charts right at the break out of the trendline which is very, very important.

Plus, look at the golden cross. The blue line is the 50 days average, orange is the 200 days average and when t50 days average crosses above the 200 days average, it is sign of bullishness. It's called golden sign in technical analysis. This was a bullish sign. So it indicated a stock or the instrument has turned bullish and it's a buy on dips.

So here after a death cross, which is a negative crossover, it has turned in to the golden cross, indicating a strong bullish scenario for Bank Nifty.

I even went further with the top down approach and moved on to the hourly chart of the point and figure.

 

So if you look at the screen over here, there are two charts over here. Let's start with the left hand side. If you look at the left side, it is 0.5% by 3, which means every X and O you see on your screen is 0.5%.

0.5% by 3 here we are witnessing a double top buy. What does this mean? After a rally, there is a consolidation and then a resumption of consolidation happening after the breakout. There is a double top buy on the point and figure chart.

If you look at the right hand side chart, it's 0.25 by 3. This means that every X and O is 0.25%. Now here there is a triple top buy breakout.

Again, a rally, a consolidation, pause to the momentum, a breather I would say, and a resumption in the momentum. So 0.5% indicates a double top buy. 0.25% indicates a triple top buy.

So if I go on to sum up all the charts together, weekly, a trendline breakout, daily, trendline breakout with golden cross, and in the point and figure on hourly chart is a breakout.

So this indicates that the Bank Nifty could lead the Nifty to an all-time high. So stay invested in the Banking stocks which are breaking out.

Signing off, Brijesh Bhatia.

Warm regards,

Brijesh Bhatia
Brijesh Bhatia
Research Analyst, Fast Profit Report
Equitymaster Agora Research Private Limited (Research Analyst)

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