The Nifty extended its recovery for the fourth straight session on Monday, advancing nearly 68 points, or 0.29%, to close above the 23,400 mark. As a result, the index has logged its longest winning streak since CAS rollout in August.
Price Structure Improves with Higher High and Higher Low
The index formed a bullish candle and maintained a higher-high, higher-low structure compared with the previous trading session. The candle was also the strongest bullish formation seen over the last four sessions, pointing to an improvement in short-term price action.
The sequence of higher lows remains supportive for the recovery, but the overall trend is yet to turn decisively positive.
Close Above 8-EMA Adds to Near-Term Strength
The Nifty managed to settle above the 61.8% retracement level of the large bearish candle formed on September 15. It also moved back above its 8-day EMA, which is a constructive development from a short-term perspective.
However, the index is still trading below the 23.6% retracement level of the decline recorded over the previous six weeks. This indicates that the recent rise remains part of a recovery phase for now, rather than a confirmed reversal of the broader downtrend.
23,600 Zone Remains the Bigger Test
The first resistance is seen around 23,509, while the more important hurdle is placed near 23,600.
The 23,600 area carries technical significance for two reasons. It lies near the upper portion of the large bearish candle formed on September 15 and also represents a change-in-polarity zone.
The same area had earlier provided support before the index broke below it on September 9, 2026. Following that breakdown, the zone is now expected to act as resistance. A sustained move above 23,600 would therefore mark an important improvement in the price structure.
Broader Market Yet to Support the Recovery
The benchmark index ended higher, but participation across the broader market remained weak. The Nifty Midcap 100 and Nifty Smallcap 100 lagged the headline index, while overall market breadth stayed subdued.
This remains an area of concern. A healthier recovery would ideally be accompanied by stronger participation from the broader market rather than gains being restricted mainly to the benchmark.
Bearish Momentum Continues to Ease
The 14-period RSI remains below 40, suggesting that momentum has not yet entered a strong bullish zone.
At the same time, the MACD histogram shows that bearish momentum has reduced considerably. This indicates that selling pressure is easing, although further improvement in momentum indicators would be needed to support a stronger upside move.
Nifty Outlook for September 22
The short-term recovery remains intact as long as the Nifty continues to form higher lows. Immediate resistance is placed at 23,509, followed by the more crucial 23,600 level.
A sustained close above 23,600 would be an important technical signal, as the index would move above the upper range of the September 15 bearish candle as well as the change-in-polarity resistance zone. Such a move would improve the probability of a broader trend reversal.
On the downside, 23,287 is the immediate level to monitor. A close below this level would weaken the current recovery setup and could drag the index towards the 23,100–23,000 support zone.
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.
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