09/10/26, Technical Study and Market Expectations for the Next Week

The Nifty 50 staged a sharp reversal after a day of heavy selling, rising 1.3 percent on October 9 and forming a Bullish Harami candlestick pattern on the daily chart. While the pattern suggests a potential trend reversal, follow-through buying next week will be crucial to confirm the recovery. However, the broader technical structure remains bearish, with the index trading below all key moving averages—the 10-, 20-, 50-, 100- and 200-day exponential moving averages (EMAs)—on both daily and weekly charts, all of which are sloping downward.

The index also snapped an eight-week losing streak, ending the week 0.44 percent higher and offering some relief to bulls. On the weekly chart, it formed a Doji candlestick pattern, indicating indecision between buyers and sellers. Although a Doji following a downtrend can signal a potential reversal, confirmation from subsequent price action is needed before a bullish trend can be established.

On the upside, the Nifty 50 faces immediate resistance at 22,800, near the current week's high. A sustained move above this level could pave the way towards 23,000, which coincides with the 20-day EMA and the midline of the Bollinger Bands. As long as the index remains below the 23,000 zone, consolidation and range-bound trading may continue. On the downside, support lies in the 22,300–22,200 zone. A break below this range could trigger renewed selling pressure, according to market experts.

The Nifty 50 opened higher on Friday and remained in positive territory throughout the session. Extending its gains as the day progressed, the index touched an intraday high of 22,581 before closing at 22,520, up 289 points, or 1.30 percent.

The Relative Strength Index (RSI) has formed a base in the oversold zone and is now approaching 40, suggesting that selling pressure may be easing and a short-term pullback could be in the offing. The Moving Average Convergence Divergence (MACD) remained below its signal line, although the histogram indicated a moderation in bearish momentum. Together, these indicators point to the possibility of a near-term recovery, but do not yet confirm a sustained reversal.

"Technically, the market is still holding lower tops on both daily and intraday charts, which is largely negative. However, momentum indicators suggest oversold conditions, so a temporary pullback rally from current levels cannot be ruled out," said Amol Athawale, VP–Technical Research at Kotak Neo.

He identified 22,400 as a key support level for traders. If the index sustains above this level, the pullback could continue in the near term. On the upside, the Nifty 50 could rebound towards 22,800, with further gains potentially taking it to 23,000, he said.

Conversely, a break below 22,400 could intensify selling pressure and drag the index towards the 22,200–21,900 range, he added.

Weekly options data suggest that the 23,000 strike, which has the highest concentration of Call open interest, could act as a key resistance level. The 22,500 strike, which has the highest Put open interest and the second-highest Call open interest, is another crucial level to watch for directional cues. Meanwhile, the 22,400, 22,300 and 22,200 strikes, which have the next-highest concentrations of Put open interest, could provide support.

Meanwhile, the India VIX, a gauge of expected market volatility, declined 5.89 percent to close at 14.37 on Friday, easing some concerns among bulls. However, the index remains above its key moving averages and at relatively elevated levels, suggesting that caution is still warranted. A decisive decline below 12 could provide greater comfort to bullish investors.

The broader macroeconomic backdrop also warrants caution. Brent crude oil futures remained above $100 a barrel, while the US 10-year Treasury yield stayed above 5.25 percent. The rupee recovered marginally but remained near its weekly lows, while foreign institutional investors (FIIs) continued to be net sellers. These factors continue to pose headwinds for a sustained market recovery.

Bank Nifty

The Bank Nifty also staged a strong recovery on Friday, reclaiming the 55,200 mark and closing at 55,257, up 742 points, or 1.36 percent. On the daily chart, the index formed a bullish candle with a small upper shadow, indicating buying interest despite some profit-booking at higher levels.

The banking index has recovered more than 1,400 points over the past eight trading sessions, suggesting that selling momentum is weakening and buying interest is emerging at lower levels. For the week, it gained 1.48 percent, snapping a seven-week losing streak. The weekly bullish candle featured a prominent lower wick, indicating buying interest at lower levels.

The index's close above the 10-day EMA also points to an improvement in short-term momentum. The RSI recovered from lower levels and moved above 40 to 45.2, accompanied by a positive crossover. Meanwhile, the MACD registered a bullish crossover, with its histogram turning green for the first time since September, suggesting a potential improvement in momentum.

The Bank Nifty also reclaimed the 61.8 percent Fibonacci retracement level on the daily chart and closed above the crucial 55,200 resistance zone, strengthening the case for a short-term recovery.

"The index may extend its recovery towards 55,800 and 56,000, suggesting the possibility of a relief rally," said Vatsal Bhuva, Technical Analyst at LKP Securities.

However, the rebound should not yet be interpreted as a confirmed trend reversal, as the broader trend remains under pressure. Immediate support is placed at 55,000, followed by positional support at 54,800. On the upside, resistance is seen at 55,500, which coincides with the 20-day simple moving average (SMA), followed by 55,800, he added.

Report by Sunil Sankar Matkar 

Disclaimer: The views and investment tips expressed by experts here are their own and not  of  us. We advise readers and Traders  to check with certified experts before taking any investment decisions.