Nifty - Detailed Analysis - 28th Feb'25

 Nifty 50 daily chart analysis using multiple technical methodologies, including Elliott Wave Theory, Fibonacci Ratios, Gann Angles, Pivot Points, and Trendlines. The analysis will include:

Nifty 50 Daily Chart Technical Analysis

1. Elliott Wave Theory

( NIFTY 50 Elliott Wave Analysis: Trend Reversal and Forecast for 2025 - Elliott Wave Trading Education > Blogs List ) Figure: Nifty 50 daily chart with a labeled Elliott Wave count, showing a five-wave advance into late 2024 (peak near 26,300) followed by a corrective decline. The chart suggests the recent down-move is part of a Wave ((ii)) correction (grey labels), with an expected Wave ((iii)) to the downside to follow (orange projection). This aligns with the view that the prior bullish cycle (Wave (5) in orange) has completed, and the index is now in a multi-wave corrective phase.

According to Elliott Wave analysis, Nifty’s uptrend peaked in late September 2024 after a five-wave impulse rally ( NIFTY 50 Elliott Wave Analysis: Trend Reversal and Forecast for 2025 - Elliott Wave Trading Education > Blogs List ). The index is now believed to be undergoing an A-B-C corrective pattern (counter-trend). In this interpretation, Wave A of the correction bottomed around 23,263 on 21 Nov 2024, and Wave B topped out near 24,857 on 5 Dec 2024 (Elliott Wave View: Bearish Sequence In Nifty Favors Downside | TalkMarkets). The ongoing Wave C is unfolding to the downside, with a bearish Elliott sequence still incomplete (Elliott Wave View: Bearish Sequence In Nifty Favors Downside | TalkMarkets). Wave C is expected to at least retest or break the Wave A low. In fact, one projection for Wave ((C)) places its potential termination in the 21,842 – 19,964 range, which represents the 100% to 161.8% Fibonacci extension of Wave ((A)) down from the Wave ((B)) high (Elliott Wave View: Bearish Sequence In Nifty Favors Downside | TalkMarkets). This implies that the correction could extend toward the low-21,000s or even around the 20,000 mark before a final bottom. An alternative wave count scenario (less favored) could consider the possibility of an expanded flat, where Wave B might retrace higher (even towards 25,000+), but 26,400 remains the key Elliott Wave invalidation level for the bearish count ( NIFTY 50 Elliott Wave Analysis: Trend Reversal and Forecast for 2025 - Elliott Wave Trading Education > Blogs List ). In summary, the Elliott Wave structure suggests the primary trend has turned down, and Nifty is likely in a corrective/downward phase (potentially a Wave 2 or Wave C of a larger degree), with further downside probable unless the index breaks above the prior B-wave high and invalidation level.

2. Fibonacci Ratios

Fibonacci retracement and extension levels on the daily chart help map out key support and target zones derived from the previous major price swings. The rally from the June 2022 low (≈15,200) to the September 2024 high (≈26,300) can be used as the basis for long-term retracements. The Nifty has already retraced a significant portion of this move, and several Fibonacci retracement levels are clustering around important price zones:

  • 50% Retracement: Around 22,600 – Nifty is currently hovering near this level, which represents a 50% pullback of the 2022–2024 bull run. This 22,600 area is also just above a former resistance from Q3 2024, now turned into support (Fibonacci — Trading Ideas on TradingView — India India).
  • 61.8% Retracement: Around 21,600–21,700 – This is the golden ratio retracement. Notably, this zone coincides with a rising trendline drawn off prior major peaks (Oct 2021 and Sep 2023) and intersects near current levels (Fibonacci — Trading Ideas on TradingView — India India). It also lines up with a significant prior consolidation zone, suggesting strong support here if the market continues down.
  • 78.6% Retracement: Around 20,400–20,500 – This deeper retracement would roughly fill the bullish price gap from December 2023 (Fibonacci — Trading Ideas on TradingView — India India). It represents a “last resort” support from a Fibonacci perspective; a decline this deep still barely keeps the longer-term uptrend intact, but falling below ~20,500 would effectively mean giving up most of the 2022–2024 gains.

In the context of the current correction (the A-B-C pattern discussed earlier), Fibonacci extensions project potential targets for the final C-wave. A common guideline is that Wave C is often equal to Wave A in length, or 1.618 times its length if it extends. Measured from the Wave B high (~24,857), a 100% extension of Wave A (≈3,600 points fall) yields a target around 21,200–21,250. Interestingly, this falls right into the aforementioned 61.8% retracement support zone. A 161.8% extension of Wave A points toward ~20,000 (upper 19,000s) (Elliott Wave View: Bearish Sequence In Nifty Favors Downside | TalkMarkets), in line with the 78.6% retracement support. These Fibonacci confluences imply that the 21,600 and 20,500 levels serve as logical downside targets for Wave C. On the upside, if Nifty bounces, Fibonacci retracements of the prior downswing can identify resistance: for instance, a rebound from 22,100 up to the 38.2% or 50% retracement of the entire decline (from 26,300 to ~22,100) would meet resistance around 23,800–24,200. In summary, Fibonacci levels are highlighting 22,600, 21,600, and 20,500 as key supports, and any corrective bounces should face resistance around 23,800–24,800, aligning with Fibonacci retracement levels of the recent fall.

3. Gann Angles

Gann angle analysis is applied to assess the relationship between price movement and time. On the Nifty daily chart, the 45° Gann angle (1x1) drawn from major historical lows provides insight into the trend’s strength. Notably, the long-term uptrend line stemming from the March 2020 COVID-crash low (around 7,511) through subsequent higher lows comes in around the current price region (low-23,000s) – effectively this is the 1x1 angle of that bull market. The index’s recent decline has brought it down to this long-term 45° support line, indicating that the multi-year uptrend is being tested. In fact, analysts have observed that Nifty broke below its long-term uptrend line in this correction, signaling a significant shift in trend momentum (Fibonacci — Trading Ideas on TradingView — India India). According to Gann theory, a failure to hold the 1x1 angle often leads to a move toward the next angular support (such as the 2x1 angle, which is a shallower slope). This suggests that if Nifty cannot quickly reclaim levels above ~23,000 and stay above this 45° line, the bearish momentum could accelerate.

In addition to price angles, Gann’s methods include horizontal price levels derived from geometrical relationships (e.g. Gann Square of 9 levels). Some of those key Gann levels happen to align with the Fibonacci supports mentioned earlier. For instance, a prominent Gann level lies near 21,851 (which is the 23.6% retracement of the 2020-2024 range) (Fibonacci — Trading Ideas on TradingView — India India), very close to the 61.8% retracement support. This adds another layer of significance to the 21,800–22,000 zone. The implication is that time and price are balancing near this area, and a break below it would be a strong Gann-based sell signal. Conversely, from a Gann perspective, any rallies should be monitored against the downward sloping Gann angles (from the recent high). A rebound that climbs above a 1x1 descending angle drawn from the September 2024 peak would indicate a potential trend change. Until such a break of the descending angle happens, the trend bias remains down (as Gann taught, the trend persists unless key angles are overcome). In summary, Gann angle analysis corroborates the critical nature of the current price zone (~22,000–23,000) – it’s where the long-term 1x1 support lies, and losing this level could open the door to faster declines, whereas holding it could lead to a time-and-price equilibrium (consolidation) or even a reversal if combined with bullish confirmation.

4. Pivot Points

Pivot points provide a quick computation of potential support and resistance levels for various time frames based on recent price extremes. Using the classic pivot point formula (Pivot = [High + Low + Close] / 3) on different intervals for Nifty:

  • Daily Pivot (for the next session): Approximately 22,348, with first support (S1) near 22,226 and first resistance (R1) near 22,572 (Pivot Points of S&P CNX NIFTY (NIFTY)). This suggests that in the immediate term, 22,226 (yesterday’s low area) is an intraday support to watch, whereas ~22,570 (yesterday’s high area) is intraday resistance. Falling below S1 could shift intraday bias further bearish toward S2 (~22,003), while climbing above R1 could spur a move to R2 (~22,694).
  • Weekly Pivot: Around 22,299, with S1 at 21,930 and R1 at 22,494 (Pivot Points of S&P CNX NIFTY (NIFTY)). The weekly pivot being in the low-22,300s indicates last week’s trading range was centered there. Notably, Nifty closed last week just above this pivot, but has since slipped back below it. 21,930 (weekly S1) aligns closely with the important 22,000 support zone we identified, reinforcing its significance. On the upside, 22,494 (weekly R1) is near the bottom of the bearish gap from earlier in the decline, making it a tough hurdle for any rebound.
  • Monthly Pivot (March 2025): Approximately 23,253, with S1 at 22,679 and R1 at 24,381 (Pivot Points of S&P CNX NIFTY (NIFTY)). Since the new month’s pivot is calculated from February’s high, low, close, it lies above the current index value, reflecting how Nifty has fallen in late February. Trading below the monthly pivot is a bearish sign for the broader trend. The first monthly support (S1) at 22,679 is just about where Nifty found support mid-week – essentially marking the 22,600–22,700 zone as a pivotal support for March. If that level fails on a monthly closing basis, the next support (S2) is down at 21,551, which nearly coincides with the 61.8% Fib retracement (~21,600) discussed earlier. On the flip side, any significant rally would face the monthly pivot at ~23,253 and then R1 near 24,380 as major resistance levels above.

Overall, the pivot point analysis highlights a convergence of key levels around the low-22,000s. The fact that daily, weekly, and monthly pivot supports all congregate between roughly 22,200 and 22,700 underscores this area’s importance. Traders often use these pivots as reference markers: for instance, staying below the daily/weekly pivot keeps the tone bearish for that timeframe, whereas regaining the pivot could be an early sign of recovery. Currently, Nifty’s inability to sustain above its pivots and its testing of S1 levels indicate weak market sentiment, unless and until it can recover above pivot points (like 22,300 on weekly and 23,250 on monthly).

5. Trendline Analysis

Trendline analysis on the Nifty daily chart reveals several important patterns in the market’s structure. First, the index has been forming lower highs and lower lows since the September 2024 peak, establishing a well-defined downward sloping trendline that connects those major highs. This primary descending trendline (from ~26,300 through the subsequent swing highs, e.g. ~24,850 in Dec 2024 and perhaps ~23,800 in Jan 2025) currently acts as a resistance barrier. As long as Nifty remains below this downtrend line, the bearish structure is intact. Analysts note that the trend will remain bearish or sideways until a breakout above this down-trendline occurs (Fibonacci — Trading Ideas on TradingView — India India) – meaning the first sign of a true trend reversal would be the index closing above a recent swing high and breaching the falling trendline. Right now, that would likely require Nifty to rally above at least the 23,800–24,000 area (and subsequently above 24,857, the last major high).

On the other hand, upward trendlines drawn from prior lows help identify support. One significant trendline is the long-term rising support line originating from the March 2020 bottom. This trendline touches notable intermediate troughs (for example, the COVID low, the swing low of March 2023, another low in Nov 2023) and comes into play again in Feb 2025 around the 22,900–23,000 level (Niftytrendanalysis — Trading Ideas on TradingView — India India). Indeed, Nifty has been testing this multi-year rising trendline recently for the fourth time since 2020 (Niftytrendanalysis — Trading Ideas on TradingView — India India). Initially, the index seemed to find support along this line (e.g., around 22,800 in late January 2025), indicating the line’s validity – essentially a long-term uptrend that the bulls attempted to defend. However, as selling pressure intensified, a decisive breakdown below this uptrend line occurred (accompanied by a large bearish candle and even a breach of the 20-month moving average (Nifty prediction for Monday, next week: If index falls below 22000... Trading view, support, resistance by experts - Markets | ET Now )). This breakdown suggests a trendline failure, which often accelerates the downtrend as stops get triggered and bearish sentiment grows. We can see the effect of this in late February when Nifty sliced through that rising support.

In addition to these major trendlines, shorter-term trendlines and pattern observations are relevant. For example, during its recent decline, Nifty left a series of unfilled downside gaps on the daily chart. Technical analysts from HDFC Securities pointed out that these “bearish runaway gaps” indicate strong downward momentum and are typically found mid-trend, implying more weakness ahead (Nifty prediction for Monday, next week: If index falls below 22000... Trading view, support, resistance by experts - Markets | ET Now ). Two notable gap areas serve as minor trendline-resistance zones: one gap is roughly between 22,450 and 22,500, and another between 22,670 and 22,720 (Nifty prediction for Monday, next week: If index falls below 22000... Trading view, support, resistance by experts - Markets | ET Now ). These gaps align horizontally with prior support levels, effectively creating resistance hurdles on any rebound attempt (they also correspond to the pivot and moving-average resistances mentioned). Another pattern to note is the possibility of a double-bottom or base attempt: earlier in February, Nifty appeared to form a temporary double bottom around 22,780–22,800 (Stock Market Highlights 17 February 2025: Sensex, Nifty crawl up to ...), from which it bounced, but that pattern failed when the index broke below 22,700. Now, if Nifty were to stabilize above 22,000, traders will watch if it carves out a new base or reversal pattern (like a bullish hammer, double bottom, or inverted head-and-shoulders) along the major support zone. In summary, trendline analysis shows that the short-term trend is clearly down (lower highs/lows), the long-term uptrend line has been breached, and the market will need to overcome several resistance levels (including the downtrend line and gap zones) to convince traders that a bullish reversal is underway.

6. Support & Resistance Levels

(Stock Market Prediction for Nifty & Bank Nifty 27th February 2025) Figure: Nifty 50 price action in late February 2025, illustrating a critical support zone around 22,600 (white dashed line) and overhead resistance around 22,700. During this period, the index formed an inverted hammer candlestick near support and oscillated in a tight range. Notably, there was significant options open interest at the 22,600 strike (puts) and 22,700 strike (calls), highlighting these levels as a short-term battle zone for bulls vs. bears.

Based on historical price action and the confluence of technical tools discussed, here are the critical support and resistance zones for Nifty:

To summarize, Nifty is presently trading closer to the lower end of a broad 22,000–25,000 range, with strong support in the low-22k area and strong resistance in the mid- to upper-24k. Traders should watch how the index behaves if it retests support (does it form a base or slice through?) and likewise if it bounces (does it stall at successive resistance levels?). These support and resistance zones will guide the validity of any breakout or breakdown in the coming sessions.

7. Entry, Target, and Stop-Loss Recommendations

Given the above analysis, we can formulate a couple of trade setups – one aligning with the dominant downtrend (short setup), and an alternate counter-trend long setup for a speculative bounce – each with clear entry, targets, and stop-loss levels. Proper risk management is emphasized in both cases.

  • Bearish Trade Setup (Short): The prevailing technical evidence favors the downside, so a strategy is to sell on rallies. An optimal entry zone for a short position would be in the 24,700 to 25,000 region, if the market rebounds that far. This area corresponds to the prior corrective high and a cluster of resistances (trendline, Fib retracement, etc.), making it an attractive level to initiate a short with a favorable risk-reward. For instance, one could enter short around 24,800, with a stop-loss above 25,100 (just beyond the noted resistance zone and Elliott wave invalidation) ( NIFTY 50 Elliott Wave Analysis: Trend Reversal and Forecast for 2025 - Elliott Wave Trading Education > Blogs List ). The first downside target would be a retest of the recent lows around 22,800–23,000 (where one could consider booking partial profits or tightening the stop). If the decline continues, a second target around 21,800 is plausible – this is the major support/fib zone and also roughly equal to a 100% extension of the prior leg down, so a significant bounce could occur here. For a more aggressive outlook, one could even target the 20,500 area eventually, but it would be wise to trail the stop-loss if the trade moves in favor. This short trade setup offers a good risk-reward ratio: risking roughly 300 points (25,100–24,800) for the potential of 1,800-3,000+ points gain. It’s important to wait for confirmation (e.g., a weakening of momentum or a bearish reversal candlestick) when price is in the entry zone, rather than blindly shorting a rally – confirmation might be in the form of a lower timeframe downtrend resuming or a clear rejection wick at resistance.

  • Bullish Counter-Trend Setup (Long): While the trend is down, there are some signs (like oversold oscillators or bullish divergences) that hint a relief rally could be in the offing if support holds. For traders looking to play a bounce, the advisable approach is to be very selective and nimble. A potential long entry would be if Nifty dips into the 21,800–22,200 support zone and then shows a strong reversal pattern (for example, a bullish engulfing candle or double bottom around those levels) (Nifty prediction for Monday, next week: If index falls below 22000... Trading view, support, resistance by experts - Markets | ET Now ). One could go long on a dip to ~22,000 (or on the break back above 22,200 after a dip), with a tight stop-loss below 21,800 (just under the key support floor). The first target for this rebound trade would be the gap resistance around 22,700–22,800, where one should consider taking profit or at least moving the stop up to breakeven, given the likelihood of supply coming in at that level. If, and only if, the index manages to push through 22,800, the next target would be around 23,500–23,700 (near the downtrend line and 50-day MA). Any further rally could even stretch to 24,300–24,500, but that would probably require some fundamental catalyst. Because this is a counter-trend trade, it’s crucial to take profits relatively quickly and not be too greedy – treat it as a shorter-term swing trade. The risk-reward here can be attractive (perhaps risking ~200-300 points to gain 500+), but the probability of success is lower since it fights the main trend. Thus, it’s recommended only if we see strong evidence of a short-term trend reversal (such as a momentum indicator turning up from oversold, or bullish breadth returning).

For both setups, position sizing should be such that no more than a small percentage of trading capital is at risk (for example, a 1-2% capital risk on the stop-loss). If the trade moves in your favor, consider trailing your stop-loss to lock in profits (for instance, after a move of 500+ points in the intended direction, tighten the stop to entry or better). Always define your exit levels (stop and target) in advance. By planning trades at well-identified technical levels (as above), a trader can avoid emotional decisions and stick to a disciplined approach.

8. Trading Strategy Suggestion

Bringing it all together, the recommended strategy for the current market condition is to maintain a cautiously bearish bias while remaining alert for oversold bounces. The weight of evidence – ongoing Elliott Wave correction, lower-highs downtrend, breakdown of long-term support, and failure to hold pivots – suggests that the path of least resistance is still to the downside. Thus, a strategy of “sell on rise” is prudent: use counter-trend rallies into resistance as opportunities to initiate or add to short positions, rather than chasing the market after it has already fallen. This aligns with risk management best practices, as selling into strength (at identified resistance) allows for tighter stop placement and better reward potential.

However, being bearish does not mean being blind to reversal signals. One should continuously monitor for signs that the downtrend is exhausting: for example, if Nifty approaches a major support like 21,800 and you observe a bullish divergence on RSI or MACD (price makes a lower low but the indicator makes a higher low), that’s a warning that the momentum of the downtrend is weakening. In such a case, it makes sense to book profits on short positions and possibly attempt a small speculative long, as outlined in the counter-trend setup, provided a low-risk entry presents itself. Essentially, flexibility is key – have a primary plan (in this case, leaning short), but be ready with a contingency plan if the market proves that a turning point is forming.

A good strategy is to use a confirmation checklist before entering any trade. For instance, if planning to short a bounce: ensure that price is indeed at the projected resistance (e.g., near a Fibonacci level or trendline), check that volume or momentum indicators are not showing unusual strength (maybe even fading), and see that other tools agree – perhaps the bounce has hit a pivot resistance, and a lower time-frame chart shows a topping pattern. The more factors lining up, the higher the probability of a successful trade. Likewise, for a long trade at support: ideally wait for a confirmation candle (like a daily bullish reversal candle off support), plus a couple of technical clues (oversold oscillator turning up, or a break back above a minor resistance trendline) to add confidence that the support is holding. In other words, confirmation from multiple indicators/methodologies – such as a confluence of a Fibonacci support, a pivot level, and a bullish candlestick pattern all appearing together – can greatly enhance the success rate. This multi-factor confirmation approach helps avoid false signals that any single indicator might give.

From a risk management perspective, always quantify your risk-reward before taking the trade. If a setup does not offer at least about twice the reward as the risk (for example, risking 200 points to potentially make 400), it might be best to pass – the technical levels we identified for entries and exits are chosen to try to ensure attractive risk/reward scenarios. Additionally, consider the use of trail stops once a trade is in profit to protect against sudden reversals, especially in a volatile market. Keeping some profit is better than watching a winning trade turn into a loser.

In terms of overarching strategy, until Nifty clearly establishes a bottom or breaks the downtrend, trading with the trend is advised, which currently means favoring shorts. That said, the presence of strong support not far below means one should not be over-aggressive at these lower levels – it’s wise to take profits on shorts as supports approach and re-sell bounces rather than assuming the index will endlessly cascade. If the market environment changes – for example, if Nifty manages to recover and close above key resistance like 23,500 or the 50-day MA – that would be an early signal to reduce bearish bias and possibly shift to a neutral or bullish stance. In summary, the strategy is: respect the downtrend, use rallies to sell, protect profits at supports, and always use stop-losses. By balancing a bearish outlook with disciplined risk management and paying attention to confirmation signals, a trader can navigate the Nifty’s swings while staying on the right side of the market’s momentum.

Comments

Post a Comment

Popular posts from this blog