Technical View: Nifty may face next hurdle at 22,500 if it defends 5-day EMA, Bank Nifty extends gains

Nifty Uptrend

Bulls were back in power for the first time in the last eleven consecutive sessions, driving the Nifty 50 beyond its 5-day EMA (22,290) with above-average volumes. Participation was seen across sectors, along with short-covering on March 5. Additionally, the momentum indicator RSI (Relative Strength Index) of 33.64 bounced from its oversold zone with a positive crossover, though it is still in the lower band.

Hence, if the index manages to defend the 22,300 zone, the next hurdle is placed at 22,500. A decisive surpassing of this level could fill the down gap of February 28, and 22,800 could become a potential target to focus on. However, the 100-week EMA (Exponential Moving Average) of 22,050 seems to be a healthy support, as it has consistently held in the last three sessions on a closing basis, according to experts.

The Nifty 50 opened flat at 22,073 but immediately gained strength and maintained its upward journey throughout the session. The index finished the trade at 22,337, up 255 points (1.15 percent), and formed a long bullish candlestick pattern on the daily charts, signaling positivity.

"Nifty has demonstrated a strong upmove from 22,000 to 22,394, and this momentum is likely to continue toward the key resistance level of 22,500. This level holds significance as both a technical and psychological resistance," said Sundar Kewat, Technical and Derivatives Analyst at Ashika Institutional Equity.

According to him, a decisive breakout above 22,500 could trigger further upside toward 22,800.

However, on the downside, if the Nifty slips below 22,300, it may retrace to test support levels at 22,000 and 21,800, respectively, he added.

The weekly options data also indicated that 22,000 is likely to serve as support for the Nifty 50, and 22,500 will act as resistance in the immediate term.

As per the Call options data, 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 22,550 strike, followed by the 22,600 and 22,350 strikes. On the Put side, the 22,000 strike holds the maximum open interest, followed by the 21,500 and 22,100 strikes, with the maximum writing at the 22,200 strike, followed by the 22,100 and 22,300 strikes.

The broader markets also rebounded sharply, with the Nifty Midcap 100 and Smallcap 100 indices gaining 2.4 percent and 3 percent, respectively.

Bank Nifty

The Bank Nifty extended its gains for the second consecutive session, climbing above its 5-day EMA (48,435) and closing at 48,490, up 245 points, driven by short-covering. The index formed a bullish candlestick pattern with a minor upper shadow on the daily charts, indicating some pressure at higher levels. As a result, it may struggle to sustain above the 10-day EMA (48,640).

According to Anshul Jain, Head of Research at Lakshmishree Investments, despite the sharp upmove, the banking index still has room for further short covering, potentially pushing it toward the 48,900 mark.

Traders should watch for sustained buying interest and volume confirmation to gauge further upside potential, he advised. A decisive break above 48,900 could trigger fresh long positions, while support remains near 48,200, he said.

The India VIX, the fear gauge, remained in the lower zone, providing comfort for bulls. It dropped by 1.16 percent to 13.67 levels and sustained below all key moving averages.