TechnicalView:Decisive consolidation breakout suggests BULLS

The weekly options data suggested that the Nifty 50 is expected to face its next resistance at 23,000, where the maximum Call open interest is placed, while support is observed at the 22,500 level.

Nifty Bullish Trend

The Bulls strengthened their support for the Nifty 50 on March 18, not only taking the index beyond short-term moving averages (10 and 20-day EMAs) but also helping it break the consolidation zone of the previous seven sessions and negate the lower high-lower low formation.

Further, the index also decisively closed above the midline of the Bollinger Bands, which is positive. The next hurdle for the index is placed at 22,900 (coinciding with the 50% Fibonacci retracement of 23,807-21,965) and 23,000 (coinciding with the 50-day EMA and long falling resistance trendline). Clearing these zones could open doors for 23,200-23,400. However, the support has now shifted higher to 22,550-22,500, experts said.

The Nifty 50 opened higher by more than 150 points and sustained above 22,600 throughout the session. The index extended its upward journey as the day progressed and touched an intraday high of 22,858, before closing at 22,834, up 326 points (1.45%), marking the biggest single-day gain since February 4.

The benchmark index formed a long bullish candlestick on the daily charts, which surpassed the crucial overhead resistance around the 22,700-22,800 levels and completely filled the bearish gap from February 24. Technically, this market action signals a decisive upside breakout of the important overhead resistance.

“This is a positive indication,” said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.

Hence, according to him, having moved sharply above the hurdle, one may expect the Nifty to advance towards the next resistance of 23,100-23,200 levels in the next few sessions (down-sloping trendline). Immediate support is placed at 22,700 levels, he said.

The weekly options data suggested that the Nifty 50 is expected to face its next resistance at 23,000, where the maximum Call open interest is placed, while support is observed at the 22,500 level.

On the Call side, the 23,000 strike attracted the maximum open interest, followed by the 23,500 and 23,200 strikes, with the maximum Call writing at the 23,000 strike, followed by the 23,400 and 23,200 strikes. On the Put front, the maximum open interest was seen at the 22,500 strike, followed by the 22,000 and 22,600 strikes, with the maximum Put writing at the 22,600 strike, followed by the 22,700 and 22,800 strikes.

Shrikant Chouhan, Head of Equity Research at Kotak Securities, also believes the short-term market outlook is bullish. But for day traders, buying on intraday corrections and selling on rallies would be the ideal strategy, he advised.

Bank Nifty

The Bank Nifty also decisively negated the lower high-lower low formation with the formation of a long bullish candlestick on the daily timeframe after a gap-up opening. The index not only closed way above the midline of the Bollinger Bands but also moved closer to the upper end of the Bollinger Bands. It surpassed the 20 and 50-day EMAs and closed at 49,315, up 960 points or 1.99%, the biggest single-day gain since November 25, 2024.

“Bank Nifty is steadily advancing toward our target of 49,800, which we’ve maintained since last week. The index has tested and closed above the 50-day EMA at 49,250, reinforcing strength. Any dips toward 49,000 are likely to find strong support,” Anshul Jain, Head of Research at Lakshmishree Investments, said.

With momentum intact, traders should watch for sustained buying pressure as the index approaches its next key level, he advised.

Meanwhile, the India VIX, the volatility index, remained in the lower zone and below all key moving averages at the final tick. It fell 1.53% to the 13.21 zone, consistently providing comfort for bulls.

Disclaimer: Moneywealth research provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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