Bank NIFTY Technical Analysis: Bearish Signals Emerge

Indian Bank NIFTY index (NSE: BANKNIFTY) was under a lot of pressure recently after the PNB scam. There are further bearish signals emerging on charts, pointing more downside in the Indian banking sector share prices.

The current Bank Nifty price is below 25,000, down from the last swing high of 27,637. The price is gaining downside move and it could decline further.

Key Takeaways:

• The Punjab National Bank Scam has ignited a sharp downside move in the Bank NIFTY index.
• There is a break below a bullish trend line at 25,500 on the daily of BANKNIFTY.
• The index could decline further considering the bearish signals on the charts.

Bank Nifty Technical Analysis Chart

Looking at the daily chart, there was a sharp U-turn in the Bank NIFTY index. The index started a downside move from the February 2018 high of 27,637. It declined and traded below a few key supports such as 27,000 and 26,000.

The recent PNB scam sparked a lot of worries in the Indian banking sector. Almost all PSU banks share price nosedived recently. The private banks were also affected, which is why, the overall nifty bank index declined by more than 2000 points.

There was a break below a bullish trend line at 25,500 on the daily of BANKNIFTY. The price also settled below the 100 and 55-day simple moving average, which is a bearish sign. More importantly, there was a close below the 50% Fib retracement level of the last wave from the 23,653 low to 27,637 high.

Therefore, there are chances of more declines in the Indian banking share prices. The next major stop or we can say the support level for the index is at 24,000. An intermediate support is at 24,590 and the 76.4% Fib retracement level of the last wave from the 23,653 low to 27,637 high.

Overall, the current price action is negative and both NIFTY 50 and NSE: BANKNIFTY could decline further in the near term. On the downside, the 24,000 level is a major support. There are possibilities of a stable price action once the index price reaches the mentioned 24K level.

In you are a long term buyer, you can look to accumulate good banking stocks during the current decline, but with caution.