Technical View: Nifty bulls may eye breach of 200-day EMA; Bank Nifty above all key moving averages now

Nifty Bull Trend

The Nifty 50 strongly held on to its gap-up opening for major part of the session on March 20 after the US Federal Reserve maintained the status quo in policy rates the previous night. The index closed well above the 50-day EMA (Exponential Moving Average of 23,000), which is expected to act as immediate support. With Thursday's rally, backed by buying interest across sectors and a sharp fall in India VIX to a five-and-a-half-month closing low, the index climbed above short-term (5, 10, and 20-day EMA) as well as medium-term (50-day EMA) moving averages, with above-average volumes, which is a positive sign.

Hence, given the second gap-up opening this week and the index hitting the upper line of Bollinger Bands, the bulls are fully charged and may take out the 100 and 200-day EMAs (around 23,400), followed by 23,800 (the February swing high), according to experts.

The Nifty 50 opened higher by more than 100 points at 23,037 and extended the rally as the day progressed, hitting an intraday high of 23,217 in late trade. The index finished at 23,191, up 283 points (1.24 percent), forming a long bullish candlestick pattern on the daily charts. For the week, the index recorded a robust bullish candle on the weekly scale, up 3.54 percent so far, with one more day to go before the trading week ends.

The Nifty is now placed at the long-term resistance of around 23,200 levels (an intermediate down-sloping trendline as per the weekly timeframe chart). The present strong upside momentum indicates the possibility of an upside breakout of the hurdle, Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, said.

According to him, a decisive upside breakout of 23,200 levels could pull the Nifty towards another resistance of 23,800 levels in the near term. Immediate support is placed at 23,070, he added.

The monthly options data suggested that the Nifty may remain in the range of 23,000-24,000 in the short term.

On the Call side, the maximum Call open interest was observed at the 24,000 strike, followed by the 23,500 and 23,000 strikes, with the maximum Call writing at the 24,000 strike, and then the 23,900 and 24,100 strikes. On the Put side, the 23,000 strike holds the maximum open interest, followed by the 22,500 and 22,800 strikes, with the maximum Put writing at the 23,000 strike, followed by the 23,200 and 23,100 strikes.

Bank Nifty

The Bank Nifty extended its rally for the sixth consecutive session, closing above the 50,000 mark for the first time since February 7. It surged 360 points to 50,063 and formed a bullish candle with upper and lower shadows on the daily charts, indicating some volatility. The most important thing to note is that the index has now surpassed all key moving averages (10, 20, 50, 100, and 200-day EMAs) and is trading above the Bollinger Bands, which is a positive sign. It is now around 600 points away from its February swing high of 50,642.

"The rally from 47,800 to 50,155 has been strong, but a healthy pullback is needed for the next leg higher. The 49,700 level now acts as crucial support and an ideal buying opportunity on dips," Anshul Jain, Head of Research at Lakshmishree Investments, said.

According to him, if the index sustains above this zone (49,700), the next upside target remains the swing high of 50,600. Traders should watch for consolidation before the next breakout, as momentum remains strong in favour of the bulls, he advised.

The India VIX, the fear gauge, fell sharply by 5.23 percent to finish at 12.6, the lowest closing level since October 1, 2024, providing strong comfort for the bulls.