- Nifty’s breakout above key resistance has lifted sentiment.
- Broader participation remains limited, and rising volatility may test traders’ discipline in the week ahead.
- Analyst suggests staying selective and cautious amid a spike in India VIX and weak market breadth.
Nifty continued its upward momentum for the third straight week and closed above 25,700 on Friday, with a substantial weekly gain of 1.68%. The index moved in a broad range last week but maintained higher highs and higher lows, which shows continued bullish momentum.
Investors will be watching for the momentum in this truncated trading week ahead due to the Diwali holiday and the weekly expiry session on Monday. Indian equity markets will be closed on Tuesday, October 21, for Laxmi Puja and on Wednesday, October 22, for Balipratipada.
Will the Nifty test new festive highs?
According to an SEBI-registered analyst, Mayank Singh Chandel, a significant positive development was the breakout above the long-term Symmetrical Triangle pattern on the weekly chart. This breakout has shifted market sentiment firmly in favour of the bulls and indicates a continuation of the long-term uptrend.
However, he added that the market breadth remained weak, as the rally was led mainly by large-cap heavyweights, while broader participation was missing. Another point to note is that India VIX jumped over 15% last week, signaling higher volatility in the near term. So, while the trend is positive, caution is still necessary.
Nifty: What are technical charts showing?
On the weekly charts, the Nifty is trading above all key moving averages, which confirms trend strength. The weekly Relative Strength Index (RSI) stands at 60.88 and is comfortably in bullish territory. And the formation of a breakout candle on the weekly chart confirms follow-through buying, Chandel said.
Key levels for the coming week
• Immediate support zone: 25,500 – 25,450
• Next support: 25,150
• Immediate resistance zone: 25,800 – 25,850
• Major resistance: 26,000
• If 26,000 is broken and sustained, Nifty can move towards 26,300–26,500
Chandel added that as long as Nifty holds above 25,450, the buy-on-dip strategy remains valid. He believes that weakness may seep in only if Nifty slips below 25,150.
While the medium-term trend continues to remain bullish after the breakout, the week ahead may remain slightly volatile due to the short trading week. Chandel advised traders to stay selective and avoid chasing gaps or sharp rallies.
Chandel’s trading strategy
• Stay moderately bullish
• Prefer buy-on-dip approach above 25,450
• Avoid over-leveraging due to rising volatility
• Trail profits at higher levels
• Focus on large-cap quality names
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