Nifty Trade Setup for September 7: Nifty Records Longest Weekly Losing Streak in Five Months; Can Bulls Bounce Back?

The Nifty 50 started Friday’s session on a positive note, with buying interest helping the index move higher as the day progressed. The index briefly crossed the crucial psychological mark of 24,000 during the session. However, similar to the previous session, selling pressure emerged at higher levels, forcing the index to give up most of its intraday gains.
The Nifty eventually closed near the day’s low, but managed to end the session with a marginal gain of 24.25 points. With this, the index snapped its four-day losing streak.

Nifty Records Longest Weekly Losing Streak in Five Months

Despite Friday’s recovery, the Nifty declined 1.15% during the week, with the index ending lower in four out of the five trading sessions. This marked the index’s longest weekly losing streak in five months.
 

Market Breadth Remains Positive, But Nifty Stocks Under Pressure

The benchmark index witnessed selling pressure across several constituents, with 28 out of the 50 Nifty stocks ending the session in the red, while 22 stocks closed higher.

However, the overall market breadth remained positive, with 2,017 stocks advancing compared with 1,520 declining stocks.

Nifty Metal Index Shine on Friday

Among sectoral indices, the Nifty Metal index emerged as the top performer, gaining over 1% during the session. It was followed by Nifty Financial Services and Nifty Media indices, which added 0.49% and 0.30%, respectively.
On the other hand, the Nifty Realty index remained the biggest laggard, witnessing selling pressure during the session.

Technical Setup of Nifty: Inside Candle Formation

Friday’s price action resulted in the formation of a small red-bodied candle with a long upper shadow on the daily chart, indicating profit booking at higher levels. The index also traded within the previous session’s range, leading to the formation of an inside candle pattern.

On the weekly chart, the Nifty 50 formed a sizable bearish candle with a lower high and lower low structure compared with the previous week, indicating that the short-term trend continues to remain under pressure.

The index is currently trading below its key short-, medium-, and long-term moving averages, keeping the overall technical setup weak. The recent breakdown from a nearly 424-point consolidation range also remains a concern for the bulls.

Key Levels to Watch for Nifty for Next Week: 23,787 Support and 24,025 Resistance

On the downside, 23,787 remains the immediate support level for the Nifty, which corresponds to the September 2 low and a key parallel low zone. A decisive break below this level could accelerate selling pressure and drag the index towards the measured target of the range breakdown, placed in the 23,600–23,528 zone, near the July low.

On the upside, the index needs to reclaim and sustain above the 24,025–24,028 zone, which coincides with Thursday’s high and the 100-day moving average. A sustained move above this level could trigger short covering and push the index towards the 20 and 50-day moving average, currently placed near 24,204-24,205.

Outlook for Nifty: Recovery Needs Confirmation Above Key Resistance

The near-term outlook for the Nifty remains cautious, and aggressive bullish positions may carry higher risk until the index demonstrates strength above key resistance levels.

A decisive close above the 100-DMA could improve market sentiment and support a recovery. Until then, the index is likely to remain vulnerable to selling pressure near resistance zones, with 23,787 acting as the key level to defend on the downside.