ALERT: Here's why 24,400 is an important support for Nifty bulls

A weekly close below 24,400 shall indicate a significant change in the medium-term trend to bearish, with a risk of sustained fall to near about 23,000 levels on the Nifty 50 index; suggest chart.

The NSE Nifty 50 index hit an intra-day low of 24,378 in intra-day deals on Wednesday amid the on-going weakness in the market. The Nifty 50 has plunged over 7 per cent from its peak of 26,277 registered on September 27, 2024. 

On the chart, the Nifty 50 index is seen trading below its short-term moving averages - the 20-DMA (Daily Moving Average) and the 50-DMA for the last many days. Yesterday, the Nifty 50 index closed below its 100-DMA for the first time since the June 04 panic fall. Prior to that, the Nifty has respected its 100-DMA since November 2023.

 

Today, as the Nifty has staged a rebound from its early morning low, the index is now seen testing resistance around its 100-DMA, which stands at 24,565.

However, apart from the 100-DMA, the Nifty 50 is seen testing support at its super trend line on the weekly chart following three back-to-back weekly losses. The Nifty has held the weekly super trend line support since late May 2023. 

Post the super trend line breakout in May 2023, the Nifty has witnessed a steady bull-run, with the index rallying as much as 44.4 per cent to its now summit. CLICK HERE FOR THE CHART

The weekly super trend line acts as a key medium-term trend indicator; hence this needs to be closely tracked. The weekly super trend line suggests key support for the Nifty at 24,407. Hence, the Nifty bulls would make a desperate attempt for the index to hold above this level.

Here are the two scenarios going ahead:

What is Nifty holds 24,400?

In case, the Nifty 50 index manages to close above 24,400 on a weekly closing basis, then the medium-term trend (positive) would remain intact. Thus, suggesting possible bounce back in the near-term.

As such, the Nifty may look to bounce back towards its super trend line on the daily scale, which stands at 25,220 levels. Interim resistance for the Nifty can be expected around 24,650 and 24,900 levels.

What if Nifty breaks 24,400?

In case of confirmed break of the super trend, the medium-term trend will technically turn to 'Sell on Rise'; with the upside likely to be capped around 26,000-mark or till such time that we see a positive breakout on the same indicator.

On the downside, the Nifty 50 index could extend the fall and test its 50-WMA (Weekly Moving Average) which stands at 23,015 levels. Interim support for the index can be expected around 24,150 and the 200-DMA at 23,350.