Nifty PSU Bank forms Doji candle
The Nifty PSU bank index has formed Doji candle on daily and weekly scale as traders turn indecisive. The Doji candle holds importance as it represents indecision in the index. If the Doji form in an uptrend, then it is a signal that the buyers are losing conviction and, when formed in a downtrend, it is a signal that the sellers are losing conviction.
From the Sectoral Sentiment Indicators perspective, the index is in extremely oversold situation as all the stocks are trading below its 200-DMA since last nine weeks and the index itself is trading below its 200-day moving average by 28.59 per cent. It won’t be a surprise if we see a pullback rally in the index.
Going ahead, current week’s high (2227.30) and low (2113.05) are critical resistance and support levels for the index. As long as these levels are not broken, it is preferable to stay in the sidelines. Meanwhile, the daily strength indicator RSI continues to remain flat below its reference line, indicating absence of strength. But momentum indicator – stochastic oscillator is scaling up, indicating upside momentum. Moreover, there has been a positive divergence between the daily RSI, daily stochastic and the index price movement, which suggests limited downside.