Global Markets are consistently making new highs as vaccine hopes are creating an optimistic sentiment among Investors. But still many professionals believe that markets are underestimating the economic risks and higher prices could once again lead to correction. Whether it’s true or not, historically we have noticed markets often retrace after making new highs, at least in short-term. In the current scenario, it’s not unwise to expect a short or medium term retracement in stock prices. Thinking from that perspective, an index which is worth keeping an eye on is Bank Nifty.
Price Action Analysis of Bank Nifty
We can notice a clear-cut Uptrend in Bank Nifty. Index prices have rallied all the way from 20500 to 30000. After reaching 30000, Price action has formed a pullback pattern. Even though it’s common to see a series of pullback patterns within the trend, Price Action traders look at them a little differently. Traditionally pullbacks are considered as trend continuation patterns, but the context in which they appear matters a lot. In this case, it has formed near a new high.
As good as it seems, this pullback could result in two different possibilities – either it can become successful and cross above 30000 mark or it could turn out to be a failure and fall lower, leading to a short term retracement. Another important fact is to think about uninformed traders who have taken positions at the peak of this pullback. Even a minor correction will force them to liquidate their trades.
So if you’re a Bank nifty trader, keep an eye on the Pullback in this time frame. We could see some interesting price behavior in coming days.
