BANKNIFTY WEEKLY ANALYSIS AND FALLLING WEDGE PATTERN

(BANKNIFTY : WEEKLY CHART)

Banknifty has broken the rising channel and right now it is trading in a falling wedge pattern. For coming week wedge support comes around 10800 and resistance around 11640 . 

In above chart One can see one interesting observation related to relation of Wedge pattern,MACD and Stochastic indicators.

When banknifty was trading in 'Rising Wedge Pattern' (Shown with pink lines in above chart) MACD has given a positive cross over and at that time stochastic was in overbought region and it remain in overbought region till the pattern is broken. Hence, one can say trend reversal took place by first signal of breaking the wedge pattern than stochastic negative crossover and at last MACD negative crossover. Here, one may apply the strategy of 'Buy on dips' (near support line of wedge) and remain in long position till the pattern is broken on downside.

Same way right now banknifty is trading in 'Falling Wedge Pattern' (Shown with blue lines in above chart) ,  Stochastic is in oversold region and MACD is still showing negative cross over.

Hence, one can conclude that trend reversal will take place only when weekly 'falling wedge pattern' is broken on upside by succeeding positive signal by stochastic and MACD. Till than one may apply the strategy of  'Sell on Rise' (near resistance line of wedge) and remain in short position till the pattern is broken on upside.

Please remember that Wedge pattern takes long time to signal a trend reversal. (Rising Wedge Pattern continued for almost 7-8 months)

Notes:

• Banknifty has broken the 'Rising Channel' (shown in green lines in above chart) in week time frame which is bearish signal from long term perspective.
• It is also trading in 'Falling Wedge Pattern' hence one may apply selling near resistance line of falling wedge (with appropriate stop loss).For coming week  its support and resistance comes around 10800 & 11640 respectively.
• According to our Agni and JBNSAR level, banknifty above 11265 will be strong and try to move towards 11650 Whereas below 11265 it will be weak and may slip to 11000----10885 level.
• Long Position in banknifty is viable only when it closes a week by breaking the wedge on upside.