Trade Setup For Oct 21: Nifty Breaking Below 22,800 Support Can Trigger Another Bear Attack, Analysts Warn

The Nifty 50 snapped its two-session winning streak on Monday as profit booking dragged the benchmark down 257 points to close at 22,888. The decline followed the recent recovery and raised questions about whether buying momentum can sustain itself amid global uncertainties and elevated crude oil prices.

"Technically, after a muted opening, the market faced consistent selling pressure at higher levels throughout the day. On the daily charts, after a strong uptrend rally it has formed a long bearish candle, indicating temporary weakness from the current levels," said Shrikant Chouhan, head of equity research at Kotak Neo.

"On the upside, the index needs to reclaim and sustain above 23,000, followed by the crucial resistance zone at 23,200-23,300, a sustained breakout above which could strengthen bullish momentum and improve the near-term outlook," said Ponmudi R, CEO of Enrich Money. However, failure to hold above the immediate support could expose the index to renewed selling pressure.

"On the downside, a decisive break below 22,800 could trigger renewed selling pressure and weaken the recovery momentum," Ponmudi said.

Apart from technical levels, global developments are likely to influence the direction of domestic equities. Higher crude oil prices, uncertainty surrounding the US-Iran conflict and elevated US bond yields remain key risks for investor sentiment.

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"Markets will likely remain volatile going ahead as higher crude oil prices, uncertainty surrounding the US-Iran conflict and elevated US bond yields would drive investors toward safe-haven assets and prompt them to offload equity holdings," said Ankur Punj, managing director at Equirus Wealth.

Against this backdrop, traders are likely to monitor global cues alongside the Nifty's ability to defend its immediate support and reclaim key resistance levels.

Bank Nifty Outlook

The Bank Nifty also ended Monday on a weak note, slipping below the 55,500 mark as selling pressure weighed on the banking index. For the index to regain upward momentum, analysts are watching the 55,800 level. A sustained move above this mark could revive buying interest and open the way for a test of the 56,000-56,100 resistance zone.

"On the upside, a sustained move above 55,800 could revive buying interest and strengthen recovery momentum toward the key resistance zone of 56,000-56,100," Ponmudi said.

On the downside, the 55,400 level is the immediate support to watch. A failure to hold above this level could trigger further selling and drag the index towards the next support zone of 55,200-55,000.