Nifty Seeks Momentum Above 26,000 Amid Trendline Resistance and Elevated Volatility

Nifty 50 and Bank Nifty Trading Update

February 23, 2024

The Nifty 50 continued its upward journey, rising 0.55% to close at 25,713, up 142 points. The index traded higher throughout the session, forming a small-bodied bullish candle with upper and lower shadows on the daily timeframe, indicating indecision between bulls and bears at higher levels.

The RSI inched toward the reference line at 51.54, while the MACD remained above the signal line and the zero line, with strength in the histogram. Momentum indicators showed improvement, but confirmation from price action is still required.

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The Nifty 50 needs to break out of the falling resistance trendline near 25,800 to open the door for 25,900–26,000 (previous swing highs). Until then, rangebound trading may continue, with crucial support at 25,600.

The India VIX, also known as the fear index, remained in an elevated zone at 14.17, signaling caution and discomfort for bulls. A sustained move below 12 is necessary for bulls to regain firm control.

Monthly options data suggest that the Nifty may remain in the 25,500–26,000 range in the short term. The maximum Call open interest was placed at the 26,000 strike, followed by the 25,800 and 25,700 strikes.

Bank Nifty

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The Bank Nifty also extended gains but underperformed the Nifty 50 and could not close above 61,500. The index formed a bullish candle with an upper shadow on the daily charts and maintained a higher-high, higher-low structure, suggesting continuation of the positive trend.

The Bank Nifty rose 92 points to 61,264, while traded volume was the highest since the Covid period. The index traded well above all key moving averages (20-, 50-, 100- and 200-day EMAs), and all these moving averages are trending upward. The RSI at 59.63 sustained its bullish crossover, and the MACD also maintained a positive crossover and upward bias.

Immediate support lies in the 60,800–60,700 zone for the Bank Nifty. Holding above this zone will keep the short-term structure positive, while a breakdown below it may trigger further downside pressure.