Nifty Trade Setup for September 8: Bears Tighten Grip as Nifty Forms Fresh Lower Low

The Nifty 50 opened with a negative bias on Monday, September 7. The index remained under pressure through most of the session and moved lower as selling pressure persisted. It slipped below the previous swing low of 23,786.80, recorded on September 2, and subsequently touched a fresh low of 23,737.90. A modest recovery from the lower levels was seen in the latter part of the session, but the index eventually settled at 23,779.15, down 0.50%.

Market breadth remained weak. Of the 50 Nifty constituents, 37 closed in the red, while only 13 managed to end higher. The broader market breadth also remained tilted in favour of declines.

Nifty Media and Nifty IT Declined Over 2%

Most key sectoral indices ended the session lower. Nifty Pharma was the notable exception, gaining 0.75%.

On the other hand, Nifty Media and Nifty IT were among the weakest performers, with both indices declining more than 2 per cent.

Bearish Price Structure Remains Intact

The Nifty formed a bearish candle on the daily chart, with both a lower high and a lower low compared with the previous trading session.

Another notable technical development was the 20-DMA slipping below the 50-DMA, adding to the short-term weakness. At the same time, the 100-DMA has begun to flatten, suggesting that the medium-term trend is also losing strength.
 

The index is now approaching an important technical support at the 61.8% Fibonacci retracement of the rally from the June low to the August high. This retracement level is placed near 23,721.

A failure to defend this zone could increase the likelihood of another leg of decline, with the July swing low near 23,606 emerging as the next important support.

23,900-24,023 Becomes Key Resistance Zone

On the upside, immediate resistance is placed around 23,900. A sustained move above this level could open the possibility of a pullback towards the 100-DMA, currently placed near 24,023.

The technical structure, however, remains weak. The Nifty 50 has already breached the important 23,900-24,000 support zone and is trading below its key short-, medium- and long-term moving averages. Recent intraday recovery attempts have also struggled to sustain at higher levels, while participation continues to remain subdued.

For the index to ease the immediate technical pressure and move back into its earlier trading range, reclaiming the 100-DMA near 24,023 on a sustained basis will be important. Until that happens, rallies are likely to encounter selling pressure at higher levels.

23,721 Holds the Key on the Downside

The 23,721 level is now a crucial support to monitor. A decisive break below this level would weaken the structure further and raise the probability of the correction extending towards 23,606, the July swing low.

As long as the index remains below the 23,900-24,023-resistance band, the near-term setup is likely to remain under pressure.

Momentum Indicators Stay Weak

Momentum indicators continue to reflect the prevailing weakness. The 14-period daily RSI has slipped below 35, indicating strong bearish momentum, although it is also moving closer to the oversold zone.

Meanwhile, the MACD histogram continues to expand on the negative side, suggesting that downside momentum remains firm.

Given the current technical structure, aggressive long positions may be avoided until the index shows signs of stabilisation and reclaims key resistance levels. A sustained move above 24,023 would be the first meaningful indication that selling pressure is beginning to ease.