The new week began on a promising and encouraging note, as buyers recouped all the losses incurred over the previous two trading sessions. Starting the session with a notable gap-up opening, buyers initially exhibited some hesitation, largely attributable to the underperformance of the heavyweight BANKNIFTY. However, buyers soon regained confidence and continued to push prices higher throughout the day. Amid a sharp improvement in sentiment, sustained buying interest enabled the index to secure a strong close near the day’s highs, finishing just shy of the 24000 mark with gains of 0.96%.

The technical structure of the frontline index NIFTY has undergone a complete turnaround. From an outlook dominated by pessimism, where prices appeared to be breaking below key support levels, buyers have staged a remarkable comeback. The index has recouped nearly all the ground lost over the previous two trading sessions, effectively signaling a failed breakdown and highlighting the resurgence of buying interest at lower levels. A similar revival in momentum is visible on the shorter timeframe Point & Figure and Renko charts, where prices are indicating a failed bearish breakout, further reinforcing the improving near-term sentiment. However, despite the sharp turnaround, the bulls are not completely out of the woods yet. A series of formidable overhead hurdles continue to cap the upside, beginning with the 24050–24100 resistance band, where both the 20 DEMA and 50 DEMA are currently positioned. A closer observation of the higher timeframe charts, particularly the Daily 0.5% and 1% Renko charts, points towards the possibility of a retest of the recent swing lows. Only a successful defense of those lows would provide convincing confirmation that buyers have regained control of the broader trend. Until then, the combination of strong overhead resistance and equally robust demand at lower levels is likely to keep the index confined within a broad sideways range. In terms of levels, the 24050-24100 zone is an immediate hurdle, followed by a stronger hurdle in the 24250-24350 zone. On the flip side, immediate supports are likely to be found in the 23880-23800 zone, followed by a stronger cushion in the 23700-23600 band.

While the higher timeframe charts continue to suggest a broadly sideways market, participants should align their strategy accordingly. Buying dips towards strong support zones remains the preferred approach, while rallies into well-defined resistance bands may be utilized to consider initiating short positions. Until the index delivers a decisive breakout or breakdown from the prevailing range, a range-bound trading strategy is likely to remain the most prudent course of action.

Key levels to watch

NIFTY

Support: 23880 – 23800

Resistance: 24050- 24100

BANKNIFTY

Support: 56900 – 56750

Resistance: 57350 – 57500

Hitesh Rathi, Technical Analyst -Equity & Derivatives, Angel One.