BANKNIFTY VIEW FOR 28TH MAY 2012

(Daily Chart)

IMPORTANT POINTS FOR TRADING

• Banknifty is Very much trading in downward channel and traingle pattern.
• As indicated earlier about the hammer candle stick  pattern near the support line of channel and triangle, Banknifty has taken a U-turn and rallied for nearly 500 points.
• Now on 22nd,23rd and 24th May it had made morning star candlestick pattern which is also a one kind of bottom reversal pattern as long as the lowest low of the pattern (in this case 9157) is not violated else the pattern is negated. However be prepared for some sort of pullback which happens nearly 50% of time.
• Today upside resistance are 9500-9540 zone and downside supports are 9290 and below that 9157 level

MORNING STAR CANDLESTICK PATTERN

The morning star candle is a bottom reversal signal that comes after an extended downtrend. This pattern is a three candle reversal setup. The third candle  is a very strong green candle, which closes at least half way into the first candle. The further it eats in the first bar, the more bullish the formation. Outside of morning star showing itself, look for other indications that this pattern is for real. For example, you want to see high volume in the third candle, indicating strength.

On the other side ,  be prepared for some sort of pullback. It is not uncommon for that to happen nearly 50% of the time. However, the lowest low of the morning star is not to be violated. If there is a violation of the lows, then the morning star is negated.