Technical Analysis Suggests Nifty's Potential Move Toward New Record High Upon Surpassing 22,500 Mark

Monthly options data suggests that the Nifty 50 is anticipated to encounter significant resistance at the 22,500 level on the upcoming monthly expiry day, with further resistance expected at 22,700. Conversely, support is predicted to be present at the 22,300 level.

The Nifty 50 continued its volatile trend in the latest trading session, particularly as the monthly Futures and Options (F&O) expiry on April 25 approached. On April 24, the index extended gains for the fourth consecutive day, closing above the crucial 22,400 level. It also breached the significant downside gap formed on April 15. Analysts suggest that if the index successfully fills this downside gap by surpassing the 22,500 mark, it could potentially advance towards levels around 22,700-22,800. However, support is expected to remain firm at the 22,300 level.

On April 24, as anticipated, the Nifty 50 commenced trading on a positive note, opening above the 22,400 mark and reaching a peak of 22,476. However, some selling pressure emerged during the final hour of trading. Nonetheless, the index managed to recover and concluded the day at 22,402, marking a gain of 34 points. The daily charts exhibited a small bearish candlestick pattern with a minor upper shadow.From a technical perspective, this pattern indicates a period of rangebound movement in the market, particularly within the 22,450-22,500 levels.

According to Nagaraj Shetti, senior technical research analyst at HDFC Securities, the Nifty is currently hovering near the critical overhead resistance of the previous opening downside gap formed on April 15, situated around the 22,500 levels. He suggests that unless the Nifty experiences a significant downturn from this key resistance level, there is a higher likelihood of a substantial upside breakout in the near future.

Shetti believes that the short-term trend of the Nifty is rangebound with a positive bias. He anticipates that the ongoing rangebound activity may lead to a definitive upside breakout in the coming days. A decisive breach above 22,500 is expected to pave the way for the next upside target of 22,800 levels in the near term. Immediate support levels are identified at 22,300-22,250.

In the Nifty 50's monthly options data, 22,500 emerges as the expected next significant resistance level for the upcoming monthly expiry, followed by 22,700, while support is anticipated around the 22,300 mark.

On the Call side, the maximum open interest is observed at the 22,500 strike, followed by the 23,000 and 22,700 strikes. Notably, there is notable writing activity at the 22,500 strike, followed by the 22,700 and 22,900 strikes. Conversely, on the Put side, the highest open interest is seen at the 22,000 strike, followed by the 22,300 and 22,400 strikes. Writing activity is evident at the 22,400 strike, followed by the 22,300 and 21,900 strikes.

Turning to the Bank Nifty, it has maintained its upward trajectory for four consective days, registering a gain of 219 points to reach 48,189. The index formed an Inside Bar pattern, resembling a Bullish Harami candlestick pattern on the daily charts.

According to Kunal Shah, senior technical & derivative analyst at LKP Securities, the Bank Nifty witnessed sideways movement following a positive start, consolidating around the support zone of 48,000-47,800. Immediate resistance is identified at 48,500, and a decisive breakthrough could signal further upside towards 49,500/50,000 levels. Shah maintains a bullish sentiment overall, suggesting that any pullbacks towards the support zone should be considered as buying opportunities.

Additionally, India VIX, the fear index, rebounded by 0.78 percent to reach the 10.28 level, following a nearly 20 percent decline in the previous session.

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Source: Moneycontrol