BANKNIFTY - LONG POSITIONS ON RETRACEMENT?

Symbol - BANKNIFTY

CMP - 49300

Bank Nifty has recently approached a crucial resistance zone, positioned between the 50600 and 51000 levels. This zone has acted as a significant barrier to upward movement. Observing the recent price action, Bank Nifty has tested this resistance area multiple times, confirming its strength.

From a technical standpoint, the index has formed a double bottom pattern near 48000 levels, which is a critical support zone. This pattern typically indicates a potential reversal of the previous downtrend, as the price failed to breach the 48000 support level and instead demonstrated a strong recovery. The double bottom formation suggests a buildup of bullish momentum from the support region.

Currently, Bank Nifty has shown a notable retracement from the resistance zone. Given the pattern formation and the recent retracement, the expectation is for the bullish trend to resume. A recovery from the current levels could lead Bank Nifty to retest the 50500 - 51000 resistance zone again. Should the index successfully break above this resistance area and sustain levels above it, the next target is likely to be around the 51800 level.

However, the bullish outlook is contingent upon the index holding its key support levels. The critical support range lies between 48800 - 48600 area. Should Bank Nifty fail to maintain this support and break below it, the trend may turn bearish, triggering a potential sell-off and driving prices lower, with the next possible support zones coming into play at lower levels.

In summary, the technical analysis suggests a favorable bullish scenario, provided the key support levels hold. If the resistance zone around 50800 is breached, further upside momentum toward the 51800 region is possible. However, failure to hold the support zone could lead to a reversal in the trend, and further downside could materialize.