Technical View: Nifty may consolidate as long as it stays below 23,000 amid elevated volatility

Nifty Technical View

The Nifty 50 showed a smart recovery of more than 200 points from the day's low and closed moderately higher on February 17, turning green for the first time in the last nine consecutive sessions. However, it could not scale above 23,000 amid rising volatility. This rebound was expected, given the sharp selling pressure in the past, but overall sentiment remains bearish since the index traded well below all key moving averages (10, 20, 50, 100, and 200-day EMAs), continuing its lower highs-lower lows formation. Hence, as long as the index stays below 23,000, consolidation may persist, with support at 22,700. Below that, the 22,500–22,400 zone is a key area to watch. On the higher side, the index may face resistance in the 23,100–23,300 range, according to experts.

The Nifty 50 opened lower at 22,810 and hit an intraday low of 22,725, but the index started showing recovery in the morning itself amid volatility and finally finished at 22,960, up 30 points. It formed a bullish candlestick pattern with a minor lower shadow on the daily timeframe.

The hourly momentum indicator has triggered a positive crossover. An improvement in the PCR (Put Call Ratio - open interest) from 0.64 to 0.81 suggests put writing, which helps form a strong support base in the 22,800–22,700 zone from a weekly expiry perspective, Jatin Gedia, Technical Research Analyst at Mirae Asset Sharekhan, said.

Considering these data points, he expects a relief rally towards 23,250 (the 20-day moving average) from a short-term perspective. "We change our short-term bias to positive, with a short-term target of 23,700, which coincides with the 20-week average," he said.

The weekly derivative data indicated that the Nifty may trade in the range of 22,500–24,000 in the short term, with immediate support at 22,800 and resistance in the 23,300 zone.

On the Call side, the 24,000 strike holds the maximum Call open interest, followed by the 23,500 and 23,300 strikes, with maximum Call writing at the 23,700 strike, then the 23,600 and 23,500 strikes. On the Put side, the maximum open interest was seen at the 22,500 strike, followed by the 22,600 and 22,800 strikes, with maximum writing at the 22,600 strike, then the 22,250 and 22,800 strikes.

Bank Nifty

The Bank Nifty also rebounded to close at 49,259, up 159 points, and formed a bullish candlestick pattern with a long lower shadow on the daily charts, indicating buying interest at lower levels. However, the index still traded below all key moving averages, which is a negative sign.

"This sharp rebound indicates both short covering and fresh buying interest. On the upside, the 49,200–49,300 zone will act as immediate resistance. A breakout above this level could propel the index toward the key daily swing high of 49,800," Anshul Jain, Head of Research at Lakshmishree Investments, said.

Traders should watch for sustained strength above resistance to confirm further upside. Until then, buying on dips remains a favorable strategy, he advised.

Meanwhile, the India VIX, the fear factor, maintained its upward journey, rising 4.71 percent to 15.72 and climbing above all key moving averages. This has made the bulls more cautious.