Thukral recommends avoiding long-term positions until the index reclaims 25,250
The Nifty 50 index has entered a short-to-medium term downtrend, after decisively breaking its rising trend line on July 25, noted SEBI-registered analyst Aditya Thukral. He expects a potential decline to 24,200 in the coming sessions.
The breakdown was preceded by the breach of both the 20-day and 50-day exponential moving averages (EMAs) on July 11 and July 25, respectively, Thukral said.
Since then, the index has struggled to close above the previous day’s high, managing to do so only once, an indication of continued selling pressure. A consistent pattern of lower highs and lower lows confirms a short- to medium-term downtrend, the analyst added.
At the time of writing, the Nifty was up 0.6% at 24,714.20.
Technical Trends
The prior rally from April 7 lacked strength, failing to push the 14-day relative strength index (RSI) above 70, suggesting it was a corrective bounce rather than a part of a sustained uptrend, he said.
According to Elliott Wave analysis, the decline appears impulsive in nature. Even if this is part of a larger correction, Nifty may still fall toward 24,200.
Currently, prices are retracing higher in wave II of a broader wave C. On the hourly chart, RSI readings between 60 and 70 could provide a selling opportunity, and cap the upside at around 24,850 – 24,900 before resuming the decline, he added.
Strategy Ahead
Thukral recommended avoiding long-term positions until the index reclaims 25,250. Derivatives traders can consider shorting Nifty Futures (August contract) near 24,950 – 25,000 with a stop-loss at 25,350, aiming for 24,300 as the downside target within August.
The index has gained 4.5% since the turn of the year.
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