Nifty Trade Setup for September 18: Will Bulls Extend the Rally for Third Straight Session? Key Levels in Focus

The Nifty 50 opened below the 23,200 mark on Thursday, September 17, forming an almost open=low candle on the daily chart. The index gradually moved higher and touched an intraday high of 23,363.55. However, selling pressure emerged at elevated levels, resulting in the index giving up nearly 93 points from the day’s high before settling at 23,270.60, up by 53 points or 0.23%.

With this move, the index extended its gains for the second consecutive session. The decline in volatility provided additional comfort to market participants, with the India VIX falling by 6.7%. 

Market Breadth Remains Positive

The broader market participation remained encouraging during Thursday’s session. Among the Nifty 50 constituents, 36 stocks closed higher, while 14 stocks ended in negative territory, indicating broad-based buying interest.

The overall market breadth on the NSE was also positive, with 2,262 stocks advancing against 1,279 declining stocks.

Nifty Pharma, Realty and Media Lead Sectoral Gains

Sectoral performance remained largely positive, with most indices ending in the green. The only exceptions were the Nifty Bank and Nifty PSU Bank indices, which closed lower due to weakness in banking heavyweights.

Among the gainers, the Nifty Pharma, Nifty Realty and Nifty Media indices outperformed, each closing with gains of over 1%. The strength in these sectors supported overall market sentiment during the session.

Nifty Technical Setup: Recovery Continues but Confirmation Awaited

Thursday’s price action resulted in the formation of a bullish candle with an upper shadow, highlighting buying interest along with some profit booking at higher levels. Banking majors such as HDFC Bank and ICICI Bank acted as a drag and restricted the index from sustaining higher levels.

Despite the late-session selling pressure, the Nifty formed a higher high and higher low compared with the previous session, indicating gradual improvement in short-term momentum. However, the index continues to trade below the 8-EMA, suggesting that the broader short-term trend remains under pressure.

The index tested the 50% retracement level of Tuesday’s decline but failed to sustain above it and closed below the 38.2% retracement level. The lower Bollinger Band continues to move downward, indicating that downside pressure has not completely faded. A flattening or upward movement in the lower Bollinger Band could provide room for a further recovery attempt.

After the recent decline, the index has entered a zone where mean reversion could support a short-term pullback. The Nifty closing near the previous session’s high also indicates that buyers continue to defend lower levels.

Momentum Indicators Show Early Signs of Improvement

The 14-period daily RSI remains in the oversold zone, although the indicator suggests that selling pressure has moderated. The MACD histogram also shows a reduction in negative momentum, indicating that bearish momentum is gradually weakening.
However, the recovery still requires stronger confirmation, as the index closed below the 50% mark of the day’s range. A decisive breakout above key resistance levels would be required to establish a stronger bullish setup.

Key Levels to Track for Nifty 

For the recovery to gain strength, the Nifty needs to close decisively above the 8-EMA placed at 23,418, supported by higher volumes. A move above this level could improve the short-term outlook.

On the downside, the 23,115–23,118 zone remains an important support area. As long as the index holds above this range, consolidation with a positive bias may continue. However, a break below this support zone could increase selling pressure and drag the index towards the 23,070–23,000 range.