Technical View: Follow-up buying above 20-DEMA needed to take Nifty 50 beyond 23,000; 55,000 crucial for further Bank Nifty upside

The Nifty 50 bounced back sharply on October 29 after two sessions of mild correction amid consolidation, rising more than 1 percent and decisively reclaiming its 20-day exponential moving average (EMA), placed at 22,824, which had acted as a hurdle in the previous two sessions. Going ahead, sustained trading above the 20-day EMA will be crucial for the index to advance beyond 23,000 towards 23,200, a key resistance zone.

Until then, range-bound trading cannot be ruled out, with immediate support placed at 22,800–22,700, according to market experts. Technically, momentum indicators showed signs of improvement. The Relative Strength Index (RSI) reclaimed the 50 mark to close at 50.85, accompanied by a positive crossover. Meanwhile, the Moving Average Convergence Divergence (MACD) continued to move higher above the zero line, with a dark green histogram bar appearing after contraction over the previous six sessions.

However, the broader technical structure remains weak, as the Nifty 50 continues to trade below its 50-day and 200-day EMAs, both of which are sloping downward. On the daily charts, the index formed a long bullish candle above the midline of the Bollinger Bands, indicating a resurgence in buying interest following the recent consolidation. The Nifty 50 opened on a flat note but quickly gained momentum, extending its gains as the session progressed.

It hit an intraday high of 22,962 in late trade before closing at 22,937, up 238 points, or 1.05 percent. After a series of bearish formations characterised by lower tops and lower bottoms, recent price action signals the formation of a higher bottom around the 22,400 level. This could potentially pave the way for bullish chart formations characterised by higher highs and higher lows, said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.

According to Shetti, the Nifty's short-term trend remains positive. He expects the index to advance towards the next resistance at 23,200 in the near term. Any dips could attract buying interest around the immediate support zone of 22,800–22,750, based on the concept of change in polarity, he said. Weekly options data indicated that the 23,500 strike, which has the highest concentration of Call open interest, could act as a crucial resistance level.

This is followed by the 23,000 strike, which has the next-highest Call open interest and could offer immediate resistance. On the downside, the 22,700 strike, where the highest Put open interest is concentrated, could serve as a key support zone. The 22,800 strike, which has the next-highest Put open interest, is likely to provide immediate support. Meanwhile, the India VIX, a gauge of expected market volatility, declined for the third consecutive session, falling 6.94 percent to 15.11.

The moderation in volatility signals some relief for the bulls. However, a decisive fall below the 13 mark would be needed to bring volatility down to levels more comfortable for bullish market participants. Bank Nifty: 55,000 crucial for further upside The Bank Nifty extended its uptrend for another session, rallying 642 points, or 1.18 percent, to close at 54,910. The index formed a long bullish candle on the daily charts, while follow-up buying provided confirmation of the bullish reversal pattern—a Bullish Piercing Line—formed in the previous session.

Going ahead, the 54,900–55,000 zone is expected to be crucial for further upside, as it coincides with the midline of the Bollinger Bands and the 20-day EMA. A sustained move above this zone could pave the way for an advance towards 55,700 and 56,100. However, the broader technical structure remains negative, with the Bank Nifty trading below its medium- and long-term moving averages. The RSI rose to 47.06, indicating an improvement in momentum, although it remained below the neutral 50 mark.

The MACD is on the verge of a bullish crossover, while the red histogram bars contracted significantly after expanding over the previous three sessions, suggesting that bearish momentum is easing. "The 55,400–55,500 zone is likely to act as a crucial resistance area for the index. A sustained move above 55,500 could extend the ongoing pullback rally towards the 56,100 level," said Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities.

On the downside, the 54,500–54,400 zone is expected to provide immediate support. As long as the index holds above this support zone, the broader short-term trend is likely to remain constructive, he added.