Here are some interesting observations on the ratio chart of Bank Nifty to Nifty:
- The ratio has taken support just below the 0.618 Fib retracement
- The ratio has taken support at the prior support confluence zone
- There is a double bottom pattern on the ratio chart
- RSI recently formed a bullish divergence with price
- The ratio is now testing the immediate resistance of 0.618 retracement and the 50-dma
This indicates that there is a greater probability the ratio could start moving higher, especially if it sustains above the 0.618 retracement and the 50-dma (both are at 2.02). What this means is that Bank Nifty could start outperforming Nifty till the time the ratio is above the recent low (1.91).
