Technical View: Decisively surpassing short term moving averages raises hopes for Nifty moving towards 24,400

Nifty Uptrend

The Nifty 50 recorded its biggest single-day gain since November 22, continuing the strong momentum for the second day of the new year, 2025, on January 2. The index could not sustain for long below the 200-day EMA (Exponential Moving Average), which is a long-term trend indicator, and bounced back above it in the previous session. Moreover, it not only stayed above the 200-day EMA (23,700) but also decisively surpassed short-term moving averages, like the 10 and 20-day EMAs, in a single session, with the closing price just shy of the 50-day EMA. The rally was observed across sectors.

Given the continuation of the higher high-higher low formation for the second consecutive session, along with above-average volumes, experts expect the Nifty to move beyond the 50 and 100-day EMAs, targeting 24,400 (the 38.2% Fibonacci retracement from the record high to the November low), followed by 24,800 (the 50% Fibonacci retracement). The crucial support level is placed at 23,700.

The Nifty 50 opened strongly higher at 23,783 and extended its upward journey as the day progressed, hitting an intraday high of 24,227 before closing at 24,189, the highest closing level since December 18. This marked an increase of 446 points, or 1.88%. The index formed a long bullish candlestick pattern on the daily charts after a period of consolidation since last week.

"This is a positive indication and signals an important turnaround for the market on the upside. The recent swing low of 23,460 on December 31 could now be considered as a larger degree higher bottom formation," said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.

According to him, the short-term trend for the Nifty remains strong on the upside, and one can expect the Nifty to move towards the next hurdle of 24,400. Any dips from here could find support around 23,900, he added.

On the options front, the maximum call open interest was seen at the 25,000 strike, followed by the 24,200 and 24,800 strikes, with maximum call writing at the 25,000 strike, then the 24,200 and 24,800 strikes. On the put side, the 24,000 strike holds the maximum open interest, followed by the 23,900 and 23,800 strikes, with maximum writing at the 24,000 strike, then the 23,900 and 24,200 strikes.

The derivative data above suggests that the Nifty may face resistance at the 24,800–25,000 levels, with support at 24,000.

Bank Nifty

The Bank Nifty continued its higher high formation for another session, rising by 545 points (1.07%) to 51,606 and forming a long bullish candlestick pattern on the daily timeframe with healthy volumes, indicating strength. It closed above the 10 and 100-day EMAs, targeting the 50-day EMA (51,870) and the 50% Fibonacci retracement level (52,120).

"The index is still consolidating in the range of 50,500–52,000. Sustaining above 52,000 could spark a fresh rally toward the 52,500–53,000 levels," said Hrishikesh Yedve, AVP, Technical and Derivatives Research at Asit C Mehta Investment Intermediates.

The India VIX, the volatility index, snapped its three-day gain, falling by 5.31% to 13.74, which eased concerns and made the bulls more comfortable.