For those of you who would have read yesterday's comments regarding the short-covering, if not read them - click here
Bank nifty opened right at the resistance level with a gap-up, the resistance now became support and held quite strong. Infact there was only 1 attempt today to break it and that too in the 2nd candle. Bank nifty rallied in a classic 45 degree slope with a strong price action - suggesting the move is cemented and strong.
BN took out the 2nd resistance at 14.20 and closed well above it.
What i understood from these moves are, most market participants have a good short position on the call side. But each time their levels are getting broken, triggering further upside. And when market moves further up, more shorts enter the system which fails quite soon too. This is like an avalanche or a classical spiral up move. What i also infer is that there will be a time in the coming days, wherein the call writers are right and the market will crash down. Predominantly because BN is now at all time highs and India is the only market staying afloat with the weak global macros.
However strong the bull is, when the fundamentals are weak - they have to clear the field for the bears. If bulls keep fighting, the fall becomes even deadlier !
5mts chart for last few days when viewed together shows upside
1hr chart also shows further upside.
Bank nifty important support and resistance lines
s1: 40149, s2: 39738
r1: no resistance line because BN near ATH
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