Nifty Analysis: Momentum Builds Toward 24,800; Bank Nifty Breaks Out

Nifty Analysis: Momentum Builds Toward 24,800; Bank Nifty Breaks Out

Nifty 50: Key Levels and Technical Breakout

On December 3, the Nifty 50 showcased a robust performance, closing decisively at 24,457, up by 182 points, and marking a three-day rally of nearly 400 points. The index has now climbed above all major moving averages, including the 50-day and 100-day Exponential Moving Averages (EMAs), confirming a bullish sentiment.

The breakout above the critical resistance zone of 24,350 signals the formation of a bullish pattern. Notably, the index broke out of a downward-sloping trendline and an Inverted Head and Shoulders pattern, pointing to further upside potential. The next targets to watch are 24,800, which aligns with the 50% Fibonacci retracement level, and the 25,000-25,200 zone.

Support is firm at 24,300, with options data showing additional support at 24,000. The Relative Strength Index (RSI) at 55.7 indicates a positive momentum. According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, a breakout above 24,500 could invalidate the previous bearish pattern of lower tops and bottoms, ushering in a new bullish cycle.

Options Data Insight

Maximum Call Open Interest: 25,000, followed by 24,800.

Maximum Call Writing: 24,900, indicating potential resistance around this level.

Maximum Put Open Interest: 23,500, with substantial writing at 24,400 and 23,800, reinforcing the support zones.

Bank Nifty: Two-Month Consolidation Ends with a Breakout

The Bank Nifty outshone the Nifty 50, surging 587 points or 1.13% to close at 52,696. This breakout above 52,500 marks the end of a two-month consolidation phase. The index is now trading above the critical 61.8% Fibonacci retracement from its September highs to November lows, suggesting a continuation of the upward momentum.

Broad-based buying across PSU and private banks drove the rally. A bullish candlestick pattern on the daily chart, coupled with sustained volumes, indicates strength. According to Rajesh Bhosale, Technical Analyst at Angel One, the immediate support lies at 52,200, while resistance is expected at 53,000-53,300.

This technical setup highlights the possibility of continued outperformance in the banking sector, further boosting overall market sentiment.

Outlook: What’s Next?

The Nifty is positioned for a move toward 24,800-25,000, while the Bank Nifty looks set to test 53,300 in the short term. Traders should keep a close watch on these key levels for opportunities.

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