Technical Bits: Bank Nifty forms bearish engulfing candle

Bank Nifty formed an outside bar resembling a Bearish Engulfing pattern on the weekly time frame, which indicates that the bears were in dominant position. Among the constituents, Yes Bank and Kotak Bank were the outperformers, while on the flip side, Punjab National Bank and Bank of Baroda was the underperformer. 

The short term 50-day exponential moving average is crucial for bulls, which is currently placed at around 26,945 level, failure to hold this support would lead to further correction up to the level of 26,400, while on the upside, the index is likely to face resistance near 27,650-27,750 level. 

Considering the weekly time frame, the 14-period RSI has recently given negative crossover and fast stochastic is trading below its slow stochastic, which suggest more downside for now. 

Derivatives data suggests that among Bank Nifty Calls, 27,500 strike price of the January 31, 2019 weekly expiry is the most active call. Whereas among Bank Nifty Puts, 27,000 strike price of the January 31, 2019 weekly expiry is the most active Put. For the January 31, 2019 weekly series, the maximum open interest (OI) outstanding for Calls were at 27,500 strike price and that for Puts were at 27,000 strike price.