Nifty likely to consolidate, keep an eye on 21,500; Nifty Bank overbought

According to Ravi Nathani, an independent technical analyst, a breach of 21,500 could trigger a consolidation phase with a negative bias, with Nifty seeking support at 21,125, 20,700, and 20,350.

Nifty 50 Index: Riding the Bullish Momentum Amidst Consolidation Signals

The Nifty 50 Index, currently at a CMP of 21,710.80, has been displaying a robust bullish momentum for the past 10 weeks, consistently closing with higher highs and higher lows on the charts. This trend indicates a sustained upward movement.

However, a potential shift in the narrative could occur if the index breaks below the crucial level of 21,500, marking a departure from the established pattern and suggesting a corrective phase. Traders and investors are advised to maintain a vigilant stance, placing stop-loss orders below 21,500 for bullish positions. A breach of this level could trigger a consolidation phase with a negative bias, finding potential support at 21,125, 20,700, and 20,350.

 

Looking specifically at the week ahead, a consolidation range between 21,600 and 21,800 is anticipated. A close above or below this range will be instrumental in determining the short-term direction. A closing above 21,800 may lead to resistance levels at 21,900 and 22,050, while a break below 21,600 could signal support at 21,525 and 21,375 for the week.

In summary, while the overall chart pattern suggests a bullish momentum, traders are urged to closely monitor the key levels of 21,500 and the weekly consolidation range for potential shifts in market dynamics. This cautious approach ensures readiness to adapt to emerging trends in the Nifty 50 Index.

Navigating Bank Nifty: Anticipating Consolidation Amidst Overbought Signals

The Nifty Bank Index, currently standing at a CMP of 48,159, finds itself confined within the range of 48,650 to 47,400 on the charts. This range has become a critical zone, with a potential breakout or breakdown serving as a key trigger for the market's next directional move.

A closer analysis of recent performance suggests a looming consolidation phase, carrying a negative bias due to the sharp rally witnessed over the past two months. A pullback on the charts seems imminent, given the extended bullish run.

In the context of this week's trading levels, the Bank Nifty Index is expected to consolidate within the range of 47,900 to 48,400. Resistance levels for the week are anticipated at 48,700 and 49,150, while support is likely at 47,625 and 47,175.

The technical indicators signal an overbought market, reinforcing the potential for a pullback. As such, the recommended trading strategy for the week is to sell on rallies.

Traders should exercise caution and closely monitor the key levels within the specified range, ready to adapt to emerging market dynamics. The consolidation phase, coupled with the overbought conditions, suggests a prudent approach to trading in the Bank Nifty Index for the week ahead.

(Ravi Nathani is an independent technical analyst. Views expressed are personal).