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).