Nifty Trade Setup for October 7: Nifty Surges Nearly 1% to Reclaim 22,750, Can Bulls Extend the Recovery?

The Nifty 50 extended its recovery for the second consecutive session on October 6, closing at 22,776.10, up 220.35 points or 0.98%. The index opened at 22,603.25 and moved between 22,561.60 and 22,776.10. The rebound was supported by broad-based sectoral buying, easing crude prices and positive global cues ahead of the RBI policy decision.

Market Breadth Remains Positive as Nifty Extends Recovery

Market breadth remained positive, with 31 stocks advancing and 19 declining out of the Nifty 50 constituents. Nifty Defence, Nifty Pharma and Nifty Oil & Gas were among the leading sectors. The positive breadth, combined with the index gaining nearly 1%, indicates that the recovery continued to receive support from broader participation.

Nifty Technical Setup: Bulls Reclaim 22,750, 23,076 Resistance in Focus

On the daily chart, Nifty 50 closed at 22,776.10, moving above the previous session’s high and recovering further from the 22,221.85 support zone. The index has also reclaimed the short-term EMA near 22,813, although it is still just below this important dynamic resistance. A sustained move above this EMA could strengthen the recovery towards 23,076.90, which remains the key horizontal resistance.
 

The hourly chart shows a stronger improvement, with Nifty trading above its major short-term EMAs. The index is currently holding above the 22,745 zone, while the next important hurdle is around 23,076.90. On the 15-minute chart, Nifty is also trading above its EMA cluster, indicating that short-term momentum remains firmly in favour of the bulls.

Momentum Indicators Improve Sharply

The daily RSI has improved to 36.31 from deeply oversold levels, suggesting that downside momentum is easing, although the indicator remains below the neutral 50 mark. The hourly RSI has strengthened to 60.48, while the 15-minute RSI stands at 72.58, indicating strong short-term buying momentum. The elevated 15-minute RSI also suggests that some consolidation or profit booking cannot be ruled out after the sharp recovery.

Key Levels to Track for Nifty

For October 7, 22,745–22,813 will be the immediate support zone, followed by 22,555. On the upside, 23,076.90 remains the key resistance. A sustained breakout above this level could improve the technical structure further and open the way towards the 23,300–23,500 zone. On the downside, failure to hold 22,745 could lead to some profit booking, while 22,555 remains an important near-term support.