Technical Analysis Suggests Nifty 50 Hinges on Break Above 20-Day Exponential Moving Average for Further Gains

Nifty 50 Rebounds Amid Market Optimism

The Nifty 50 index rebounded after three days of losses, closing 0.8 percent higher on April 27, as the market remains hopeful about the resumption of US-Iran talks and the potential reopening of the Strait of Hormuz. This came despite oil prices sustaining above the $100-a-barrel level.

The index's positive start to the week ahead of monthly F&O expiry due on April 28 is a welcome development. The market's optimism is reflected in the VIX, which cooled nearly 7 percent during the session, settling at 18.38. This sharp drop in volatility indicates increased comfort among market participants and reduced near-term fear, which is generally constructive for equities.

Key Levels to Watch

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The Nifty 50 needs to sustain above short-term moving averages to move towards the 24,200–24,300 zone, which includes the 50-day EMA and near the 50 percent Fibonacci retracement of the sharp correction from the February high to the April low. The index has formed a bullish candle within the previous day's red candle, indicating sustained buying interest at lower levels and a possible comeback by bulls after a reasonable downward correction.

The benchmark index opened higher at 23,945 and remained in positive territory throughout the session, hitting an intraday high of 24,131 in the second half before closing at 24,093, up 195 points (0.81 percent).

Technical Indicators

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The RSI moved upward but remained below the reference line, while the MACD histogram's green bars continued to shrink for the fourth consecutive session, although the MACD stayed above both the zero and signal lines. This indicates a cautious but improving momentum.

A bullish pattern of higher tops and higher bottoms has started to form on the daily chart, and Friday's swing low of 23,813 can now be considered a new higher bottom in the pattern.

Expert Analysis

According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, the short-term trend of the Nifty appears to have turned upward after a downward correction. He expects the next upside levels to watch are around 24,500–24,600 in the next few sessions, with immediate support at 23,800.

Bank Nifty

The banking index also bounced back, rising 174 points (0.31 percent) to 56,264, but underperformed the benchmark Nifty 50. The index is trading above its short-term moving averages (10- and 20-day EMAs) but remains slightly below its 50-day EMA (56,300).

Resistance and Support Levels

According to Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities, the 200-day EMA, placed in the 56,600–56,700 zone, will act as a key resistance. A sustained move above 56,700 could propel the index towards the 57,200 level. On the downside, the 20-day EMA in the 55,700–55,600 range is likely to provide immediate support.