Are the bulls losing their grip on Bank Nifty?

On Tuesday, the Bank Nifty has formed an inside bar and it ended lower by almost 1%. Meanwhile, on hourly time frame, it formed a lower high lower low candle. After Monday's strong move, a negative close is not a good sign for the index. It also closed below the 78.6% retracement level of the prior swing and more importantly, it failed to hold above the 100DMA. For now, the 35271-544 zone will act as a crucial resistance. Only above this zone, the Bank Nifty will move above the prior swing high. It is trading above the short-term key moving average like 20 and 50DMA. Technically speaking, there is no weakness visible. If it trades above the previous day's low, be with a positive bias. But a close below 35000 will reverse the trend. On a 15-minute chart, there is a clear head and shoulders pattern breakdown that happened on Tuesday; the target is almost at the 34900 levels. The Stochastic oscillator has given a sell signal in an extreme overbought condition. This signalling a severe profit booking may emerge soon, but the condition is only if the index beaches it's prior day low. A decline in the histogram and the RSI is also showing that the bulls are losing grip on the market. The open interest shows the profit booking is already took place on Tuesday, as the price and open interest both declined. For now, it is better to be cautious on the long side. Only above the prior day high i.e., above the level of 35544 it will give a good buying opportunity. Otherwise, ignore the long positions. A move below 35000-34900 will resume the downside move.  

The Strategy for the day

Bank Nifty has broken the head and shoulder pattern. Only a move above 35330 is positive, and it can test 35544. Maintain a stop loss at 35250. Above 35544, continue with a trailing stop loss. But a move below 35000 is negative, and it can test 34790. Maintain a stop loss at 35180. Below 34790, continue with a trailing stop loss.