Nifty is stuck in a 'waiting game'—here is why the 22,800 breakout is the only move that matters.

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The Nifty 50 traded lower for almost throughout the session and ended down 0.22 percent on October 28, marking a negative start to the November series. The index faced resistance near the 20-day EMA (22,812) for another session, which is expected to be a crucial zone for further upside in the short term toward 23,000–23,200. Until then, consolidation and range-bound trading could continue, with 22,500–22,400 providing support, as a drop below it may drag the index toward 22,200, according to experts.

Overall, the broader market structure continues to be weak as the index sustained below all key moving averages. The RSI fell to 44.90 amid consolidation but held above the signal line. The MACD also sustained above the reference line, but the green histogram bar shrank for the sixth consecutive session.

Further, Brent crude oil futures dropped from around $117 a barrel but still stayed above $110 a barrel at the time of writing this article, which is a major concern for the market, although FII selling slowed down considerably in the last few sessions.

The Nifty 50 opened lower at 22,678 and hit an intraday low of 22,498 in the morning session. It showed a gradual recovery as the day progressed but could not firmly turn into positive terrain due to pressure at higher levels. The index ended the range-bound session at 22,699, down 51 points or 0.22 percent.

On the daily charts, the index formed a small-bodied bullish candle with a minor upper and long lower shadow, indicating indecision among market participants.

"The recent swing lows have been in an ascending order, which is signalling one more attempt towards 22,800+ in the near term. Though Nifty declined on Wednesday, the underlying trend remains positive within a high-low range of around 22,500–22,800 levels. Hence, a decisive move above 22,800 is likely to bring renewed buying participation in the market," Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, said.

However, any weakness from here could find support around the 22,500 level, he added.

Weekly options data continues to indicate that the 22,500 strike, where the maximum Put open interest is concentrated, could be a key support for the Nifty 50. However, the 23,000 strike has the maximum Call open interest and is expected to be a crucial resistance for the index.

Meanwhile, the India VIX fell 0.96 percent to 16.24, extending weakness for another session but still remaining at elevated levels. In fact, it also stayed above all key moving averages, signalling the continuation of discomfort for bulls.

Bank Nifty

The banking index opened lower and tested a new October swing low of 53,626 but immediately started recouping losses and turned higher. The index remained in positive terrain for the remainder of the session despite some profit booking in the last couple of hours of trade.

The Bank Nifty outperformed the Nifty 50, rising 292.50 points or 0.54 percent to 54,267 and forming a long bullish candle on the daily timeframe. Considering the last two candles, the price action resulted in the formation of a bullish piercing-like candlestick pattern on the daily chart, indicating buying interest emerging at lower levels and a potential short-term reversal in sentiment.

However, the broader structure remained in favour of bears as the index traded well below all key moving averages, and all of these moving averages sloped downward. Momentum indicators continue to paint a cautious picture. The daily RSI remains below the 40 mark, suggesting that underlying momentum is still subdued despite the day's recovery. As long as the RSI remains below its neutral zone, bullish conviction is likely to remain limited, and rallies may continue to face resistance at higher levels.

Therefore, while the candlestick formation is encouraging, sustained strength above key resistance levels, supported by an improvement in momentum indicators, will be crucial for confirming a stronger upward move in Bank Nifty. Furthermore, the MACD remained below the signal line, with the red histogram bar expanding for the third session, indicating increasing bearish momentum.

"Going ahead, the 53,800–53,700 zone is likely to act as an important support area for the index. A sustained breach below this zone may lead to the index moving towards 53,300, followed by 53,000 in the near term," Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, said.

On the upside, the zone of 54,700–54,800 will act as a crucial hurdle for the index, he added.