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The Bank Nifty surged 2 per cent on Friday to close the week at 15,607.2 levels. This rise helped in trimming its weekly loss to 3.4 per cent. With the volatile movement prevailing, the short-term uptrend for the index is under threat. Currently, the 50 per cent fibonacci retracement of the index is providing base at 15,300 levels.
A decisive fall below this level will mitigate the short-term uptrend that has been in place from the early July 2014 low of 14,338. In that scenario, the index can decline to 15,000 and then to 14,700 in the short term.
Next significant support is at 14,500 levels. On the upside, the index faces resistance at 15,820 levels. It needs to emphatically breach this level to rise to 16,250 in the near future. Having said that, the medium-term trend is weakening.
The indicators in the weekly chart display negative divergence, implying weakness and suggesting that a medium-term trend reversal is on the cards. To confirm this trend reversal, the index has to conclusively break the key support in the band between 14,400 and 14,500. Such a fall can pull the index down to 14,000 and then to 13,300-13,500 band in the medium term.
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