Nifty falls over 1,000 points from August high; Can Fibonacci support help bulls stage a comeback?

The Nifty failed to build on Friday’s modest rebound and returned to the declining trend on Monday, September 7. The index began the session about 14 points lower and remained weak for most of the day, eventually ending 118.35 points down at 23,779.15.

The decline took the index to an intraday low of 23,737.90. Some recovery was seen during the Closing Auction Session, which helped the Nifty move off the day’s low, though it did little to change the weakness seen through the session.

With touching intraday low of 23,737.90 on Monday, the index has now fallen by more than 1,000 points from the early-August swing high of 24,774.

Nifty’s Short-Term Structure Turns Weaker

On the daily time frame, the index has formed a bearish bodied candle, carrying lower high and lower low compared with the previous session. The sequence keeps the short-term price structure on a weak footing.

The moving averages have also begun to reflect this deterioration. The 20-DMA moved below the 50-DMA on Monday, marking a negative short-term crossover. Meanwhile, the 100-DMA has flattened, pointing to a loss of strength in the medium-term trend.

The Nifty is currently placed below its major short-, medium- and long-term moving averages. Recovery attempts have also struggled to hold at higher levels, suggesting that sellers continue to emerge on rallies.

Fibonacci Support Comes into Focus

Attention now shifts to 23,721 on the downside. This level represents the 61.8 per cent Fibonacci retracement of the advance from the June low to the August high and therefore remains an important technical reference.

Holding above 23,721 could provide room for a near-term rebound or some short-covering. However, a clear breach of this level would add to the existing weakness and bring the July swing low of around 23,606 into focus.

Resistance Zone Shifts to 23,900-24,023

On the upside, 23,900 is the first level the index needs to overcome. The 23,900-24,000 area had earlier acted as support, but following the recent breakdown, the same zone may now restrict recovery attempts.

A sustained move above 23,900 could take the index towards the 100-DMA, which is currently placed near 24,023.

A more meaningful improvement in the chart structure would require the Nifty to reclaim the 100-DMA and sustain above it. Until then, the 23,900-24,023 band is likely to remain an important supply zone.

September 8 Outlook: 23,721 Remains the Level to Watch

The immediate trend remains under pressure, with the index forming a lower-high, lower-low structure and trading below its important moving averages.

For Tuesday’s session, 23,721 remains the key support. A sustained break below this level could extend the decline towards 23,606. On the other hand, a move back above 23,900 could lead to a pullback towards 24,023.

Unless the Nifty moves decisively above the 23,900-24,023 resistance area, the near-term setup is likely to remain weak, with recovery attempts vulnerable to selling at higher levels.

Stock to Watch: Bosch

Bosch witnessed strong buying interest on Monday and formed a sizeable bullish candle that engulfed the price action of nearly the previous three trading sessions. The move was supported by robust volumes, indicating healthy participation behind the rise.

The technical structure also remains positive. The stock is trading above its key short-, medium- and long-term moving averages, while these averages are aligned in the preferred bullish sequence and continue to trend higher.

Given the strong bullish candle, improving volume activity and supportive moving-average structure, the stock sustaining above ₹48,100 would keep the near-term outlook positive. On the upside, it can test ₹50,000, followed by ₹51,000 over the medium term. A stop-loss may be maintained at ₹46,400.

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.