The August series started with gains in its opening session and concluded on a positive note on the expiry day, Tuesday, August 25. The expiry session was significant, as it marked the first monthly expiry after the introduction of the Closing Auction Session (CAS) regime. During the series, the Nifty 50 gained nearly 1.45%.
However, the expiry session witnessed sharp volatility. The index opened on a weak note and touched an intraday low of 24,115.45. In the second half of the session, the index found support near the upward-rising trendline and staged a strong recovery. The newly introduced CAS provided additional support during the final minutes, helping the index reclaim the 24,300 mark and close on a positive note.
Bullish engulfing pattern improves technical setup
On the daily chart, the Nifty 50 formed a sizable bullish candle that completely engulfed the price action of the previous three trading sessions. This resulted in the formation of a bullish engulfing candlestick pattern.
With Tuesday’s recovery, the index moved above its 20, 50, and 100 EMAs. Additionally, the index closed above the 38.2% Fibonacci retracement level of the decline witnessed over the previous 12 trading sessions.
Key resistance and support levels for Nifty
Going forward, the immediate resistance for the index is placed in the 24,370–24,400 zone. This area is important as it represents the confluence of the 50% Fibonacci retracement level of the recent decline and the 20-DMA.
A sustained move above this resistance zone could strengthen the recovery and open the possibility of an upside move towards 24,600–24,700 levels.
On the downside, the immediate support zone is placed between 24,197 and 24,208, where the 50-EMA and 100-EMA are positioned. As long as the index holds above this support range, the bulls are likely to maintain control.
However, a decisive break below this zone could trigger further weakness, with the next support levels placed around 24,050–24,000.
Stock to Watch: eClerx Services
eClerx Services witnessed a sharp rally of over 50% in just 14 trading sessions, following which the stock entered a consolidation phase and formed a pennant-like pattern. The current price structure indicates that the stock is nearing a potential breakout from this bullish continuation pattern.
The stock is trading above its key moving averages, including the 20-day, 50-day, 100-day, and 200-day moving averages, indicating a strong underlying trend. A sustained move above ₹1,890 could confirm a breakout from the pennant formation and may further strengthen the bullish setup.
Post breakout, the stock could move towards ₹1,950, followed by ₹2,025 levels on the upside. A stop loss can be maintained at ₹1,812 to manage risk.
Disclaimer: This story is for educational and informational purposes only. The views and recommendations above are those of Dalal Street Investment Journal, not Mint. We advise investors to check with certified financial experts before making any investment decisions.
