The Nifty 50 has breached the critical 22,700 support level, a key zone that we previously analyzed as an important trendline support. Now, traders and investors are wondering: Where is the next major support?
According to my analysis, the next strong support zone lies between 21,800 and 22,000, and the market is currently testing this level.
Market Action on March 4, 2025: Signs of Support
On March 4, 2025, Nifty made a low of 21,964.6 but could not sustain there for more than 15 minutes. This quick rejection indicates buying interest at lower levels. After touching the low, the index bounced back, reaching a high of 22,105.05 before closing at 22,082.65.
This price action suggests that the market is attempting to hold this support zone, with buyers stepping in to defend these levels.
What’s Next? Key Levels to Watch
1. Holding Above 21,800–22,000 (Bullish Scenario)
If Nifty continues to hold above this support zone, we could see a potential trend reversal. A strong confirmation of a reversal would be:
- A higher high and higher low formation, indicating a shift in momentum (as per Dow Theory).
- A breakout above the 22,300 zone with strong price action and volume.
If these conditions are met, Nifty could recover significantly and start a fresh uptrend.
2. Breakdown Below 21,800 (Bearish Scenario)
If Nifty fails to hold 21,800, it could lead to further downside, with the next potential support levels at:
- 21,500 – A minor, psychological support level, as round numbers often act as sentiment-driven zones where traders tend to react.
- 21,300–21,000 – A major demand zone where institutional buyers may step in.
A decisive breakdown with high selling volume would confirm further downside risk.
Key Indicators to Monitor
1. Volume Analysis
- High buying volume at 21,800–22,000 could signal accumulation and a potential bounce.
- High selling volume below 21,800 would indicate strong bearish pressure.
2. Price Action Signals
- Look for bullish candlestick formations like Hammer, Bullish Engulfing, or Morning Star to confirm support.
- A higher high, higher low structure above 22,300 would indicate trend reversal.
3. RSI (Relative Strength Index)
- RSI above 30 and rising suggests a potential bounce.
- RSI below 30 indicates an oversold condition but does not guarantee a reversal.
4. Moving Averages
- The 50-day and 200-day moving averages can act as dynamic support or resistance levels.
- A break back above the 50-day moving average would be a positive signal for recovery.
How to Trade This Setup?
For Short-Term Traders
Trading the Bounce (If Nifty Holds Above 21,800–22,000)
- Entry: Look for bullish candlestick confirmation near the support zone.
- Stop-Loss: Below 21,750 to manage risk.
- Target Levels: 22,300, 22,500, and 22,700.
Trading the Breakdown (If Nifty Falls Below 21,800)
- Entry: Short positions below 21,800 with strong selling volume confirmation.
- Stop-Loss: Above 21,900 to protect against whipsaws.
- Target Levels: 21,500 and 21,300.
Final Thoughts
The 21,800–22,000 level is a crucial support zone for Nifty. The market is currently testing this level, and its ability to hold here will determine the next major move.
- If Nifty reverses and breaks above 22,300 with strong price action, a recovery is likely.
- If Nifty breaks below 21,800, further downside toward 21,500 or lower is possible.
Traders should closely monitor price action, volume, and technical indicators before making trading decisions. As always, risk management is key—set stop-losses and trade with a clear plan.