Nifty Trade Setup for September 21: Bulls Defend Lower Levels as Recovery Extends

The Nifty 50 continued its recovery on Friday, September 18, closing at 23,346.40, up by 75.80 points or 0.33%. The index opened at 23,334.70 and initially moved higher to an intraday high of 23,389.15 before witnessing some profit booking.

However, buying interest around lower levels helped the index recover from an intraday low of 23,286.60 and finish near the day’s upper range. With this move, the Nifty extended its recovery for the third straight session.

Market Breadth Remains Marginally Positive

Market breadth remained positive but relatively balanced during Friday’s session. Among the Nifty 50 constituents, 26 stocks closed higher, while 24 stocks ended lower, indicating that buying interest was present but not broad-based. The near-even distribution between advances and declines suggests that the recovery is still selective, with investors continuing to remain cautious at higher levels.

Nifty Metal, Media and MNC Lead Sectoral Gains

Sectoral performance remained mixed, with Nifty Metal, Nifty Media and Nifty MNC emerging as the leading gainers during the session. Strength in these sectors supported the broader index and helped maintain the positive tone. However, the recovery remains dependent on participation from heavyweight stocks, as the broader trend has yet to turn decisively bullish.

Nifty Technical Setup: Recovery Continues Above Key Support

Friday’s price action formed a bullish candle with an upper shadow, reflecting continued buying interest after the recent decline. The Nifty has now formed a series of higher lows from the recent bottom near the 23,100 zone, indicating that buyers are attempting to build a short-term recovery.

On the hourly chart, the index has moved above the short-term 8-EMA and 21-EMA, while the shorter EMAs have started turning upward. The 15-minute chart also shows the index holding above its short-term EMA cluster, indicating improving intraday momentum. However, the Nifty continues to trade below the important 23,615 resistance level, which remains a key hurdle for the recovery.

The 23,100 level continues to act as an important support on the daily and intraday charts. A sustained hold above this zone keeps the recent recovery structure intact. At the same time, the daily chart shows that the index remains below its major medium-term EMA levels, suggesting that the current move is still a recovery attempt rather than a confirmed trend reversal.

Momentum Indicators Show Further Improvement

The 14-period daily RSI has recovered to 33.66 after recently moving into oversold territory, indicating that selling pressure has moderated. On the hourly chart, RSI has moved above 50 and stands around 52.96, while the 15-minute RSI is also holding above the neutral 50 level. This improvement in momentum supports the ongoing short-term recovery.

However, the daily RSI remains below the 50 mark, highlighting that the broader momentum is still weak. A sustained move above the key resistance zone, accompanied by stronger volumes, would be required to confirm that the recovery is gaining strength.

Key Levels to Track for Nifty

For the recovery to extend further, the Nifty needs to sustain above the 23,350–23,400 zone and then decisively move above 23,615, which is the immediate major resistance visible on the hourly and 15-minute charts. A breakout above 23,615 could open the way towards 23,800–23,920, where the next major EMA resistance zone is placed.

On the downside, 23,200–23,100 remains the crucial support area. As long as the index holds above this zone, the recent higher-low structure can remain intact and further consolidation with a positive bias may continue. However, a decisive break below 23,100 could weaken the recovery and bring the 22,800–22,500 zone back into focus.