Nifty has been trading in a very narrow range for the last couple of weeks. It has formed a pennant-like formation on the daily chart.
Since June 18, the index has been witnessing higher low formation on the daily chart and a horizontal trendline resistance of around 15,900.
Selling emerges whenever the index approaches its lifetime high level.
Nifty50 on July 7 tested its 21-day exponential moving average (EMA) on the intraday chart, from where prices witnessed a positive spurt and closed above 15,850.
Momentum oscillator RSI (14) has formed a rounding formation on the daily chart near 60 level with a bullish crossover.
Bank Nifty has been trading in a higher high higher low formation within the rising channel pattern on a daily scale.
Prices have been above their 21 and 50-day exponential moving averages and the gap between the two averages is widening on a daily basis which indicates a strong upward trend is likely to unfold in the banking sector.
Some major banking stocks like HDFC Bank and SBI have closed above their conjunction zone and will likely lead the Bank Nifty ahead.
Looking at the current chart set up, we expect a bullish breakout in the benchmark index in the coming trading sessions.
Near-term support for the index is placed near the 15,650 level and once the previous high of 15,915 is sustainably breached, it could rise towards the 16,000 mark and even higher.