Bank Nifty trades in symmetrical triangle pattern

Considering the daily time frame, the banking benchmark index, Bank Nifty is trading in symmetrical triangle pattern since the last 21 trading sessions. As of now, the price action has narrowed substantially and the price has reached near the apex point of the triangle, which indicates that the index is likely to give a breakout in the coming days. 

The symmetrical triangle can be a continuation or a reversal pattern. In fact, more often, it is a continuation pattern. Besides the triangle pattern, the daily chart shows that Bollinger Bands have contracted, which indicates an early sign of a bigger move. 

Majorly, the index is displaying a bearish trend as it is trading below its short and long-term moving averages, that is, 20-day EMA, 50-day EMA, 100-day EMA and 200-day EMA. The daily strength indicator, 14-period RSI, is oscillating in the range of 47-41 since the last seven trading sessions, indicating an absence of strength.

Going ahead, the zone of 20,900-21,100 will be a major hurdle for the index, as the upper trendline of a triangle pattern is placed in that zone. While on the downside, we expect the index to touch the lower trendline of triangle pattern, which is currently placed at 19,350 and in case it sustains below this level, it may touch its recent swing low of 17,143, followed by 16,116 level.

The derivatives data suggest that among Bank Nifty Calls, the 21,000 strike price is the most active call for April 30, 2020 monthly expiry. Among Bank Nifty puts, 19,000 strike price is the most active put for April 30, 2020 monthly expiry. For April monthly series, open interest wise put-call ratio (PCR) is at 1.06.

For April monthly expiry, the highest call open interest is at 21,000 strike with 5,30,680 OI. On the put side, 19,000 strike has 5,47,940 open interest, which is the highest. The highest change in open interest was seen at 20,000 put of April monthly expiry with 1,86,580 OI and on the call side, 21000 call has seen the highest change in open interest with 1,55,700 OI. The highest reduction in open interest was seen at 16,500 put of April monthly expiry with -31,180 OI and on the call side, 19,500 call has seen the highest reduction in open interest with -45,880 OI. The total call open interest for April monthly series is 37,02,780 and the put open interest is 38,93,980. The current derivative data suggests that the Max Pain is at 20,000.