The Nifty struggled to attract follow-up buying on Wednesday. After touching an intraday high of 22,757.95, the index gave up its gains and settled at 22,622.70, down 99 points or 0.44%. The daily chart formed a bearish candle with a higher high and higher low, extending the alternating pattern of bullish and bearish candles to a fifth consecutive session.
Although the index ended lower, it managed to hold above important support levels, with the day's trading range remaining below 200 points. However, the decline came on higher volumes, raising some concerns. The sharpest selling emerged after noon, when the Nifty plunged over 150 points within an hour, disrupting the recovery attempt. For much of the remaining session, trading was largely range-bound.
Technical Indicators Offer Some Comfort
Despite Wednesday's weakness, the broader technical structure has not deteriorated significantly. The Nifty closed above its 8-EMA, which is now acting as an immediate support. The 14-period RSI continues to hold above 40, while the MACD histogram indicates an improvement in bullish momentum.
The hourly chart also offers some reassurance, with the index closing above the moving average ribbon. Meanwhile, the Nifty is trading around 1.03% below its 20-DMA. Barring the sharp one-hour decline, price movement remained relatively subdued, suggesting that the market is still searching for direction rather than witnessing sustained selling pressure.
Key Levels to Watch on Thursday
As discussed earlier, the formation of higher lows remains important for the recovery attempt. As long as the Nifty holds above the previous session's low and continues to form higher lows, the near-term outlook can remain cautiously optimistic.
The 22,500-22,550 zone has now emerged as an important support area. A decisive break below this band could invite fresh selling pressure, with the next major support placed around 22,180.
On the upside, the immediate resistance lies between 22,732 and 22,760. A sustained move above this zone could open the way towards the 20-DMA, currently placed at 22,858.
After eight consecutive weeks of decline, the Nifty appears to be attempting to build a base. Such a process may take time, and the alternating daily candles suggest that neither buyers nor sellers have established firm control yet. Until the index breaks out of its immediate trading range, a strong directional move may remain elusive.
For now, maintain a neutral-to-positive bias as long as the 22,500-22,550 support zone holds, while watching for a sustained move above 22,760 to strengthen the recovery prospects.
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