Banknifty opened Big gap up @ 21636 and immediately hit our major target of 21800 (Top @ 21807). It found strong resistance @ 21800 levels, a Gann Number, and reversed sharply making low @ 20911 almost 900 points down move from the top. It closed @ 21187. So it still hold 21100 levels. For the last 2 days, it was pure Gann Number Play from 20400-21100-21800 and back to 21100.
As I mentioned in yesterday's post, the VIX chart was suggesting a high probability of upmove in VIX value (Double bottom and time factor). So after Gap up and 700-800 up move VIX started increasing instead of falling, it was a clear signal for a down move. Also, Jun-6 was Gann Date and we saw its effect in today's move.
Now, What Next? The following observations will help us to plan our trade for tomorrow.
- On a daily chart, RSI shows the possibility of an "M" pattern (Jun-3 and today's RSI are exactly 61 levels-61.32). That suggests the possibility of a down move.
- On the hourly chart, MACD is showing bearish divergence, indicating momentum on the upside is reducing. Also, Banknifty is above moving averages support levels. So we can till see upside moves that can be of terminal patterns as shown by lines if 20400-20300 levels support remains intact.
Bollinger Bands are expanding on the daily chart after a long period of contraction. It suggests a big move on the cards in the coming days (No directional view).
Gann Angles:
Banknifty hit the Monthly 45-degree (1/1) angle at the top and reversed sharply. So this top may get protected.
India VIX:
VIX chart shows a sharp upside reversal from Monthly angle
VIX Gann Box suggests possible upmove towards 32 levels where it may face resistance. If 32 levels get broken we may see sharp upmove in VIX in the coming days thereby suggesting sharp down move in Banknifty. So keep watch on VIX.
So for tomorrow possible trade plan:
If 21100 is broken down targets are 20850/20400/20100
Above 21450 upside targets are 21800/22000/22500
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