Trade Setup For Oct 31: Nifty Bulls Eye More Upside If 26,100 Resistance Gets Breached

The Nifty index witnessed resistance at 26,000 levels with the index closing in the red. According to analysts, a decisive breakout above 26,100 could open the door for a retest of the previous all-time high at 26,277 and potentially extend gains towards 26,500.

Profit Booking and Near-Term Consolidation

Profit booking at higher levels as it formed a bearish candlestick pattern, indicating near-term consolidation after a strong rally, said Bajaj Broking. Over the past six sessions, the index has traded sideways within a narrow range of 25,700–26,100, suggesting a phase of time correction following a sharp 1,500-point up move in recent weeks, the brokerage added.

Broader Market Structure Remains Bullish

While short-term momentum appears capped below 26,100, the broader market structure remains firmly bullish, with strong support near 25,700–25,500 likely to cushion any dips.

“The price action reflects repeated rejection at higher levels, with immediate support placed at 25,900 and a stronger base near 25,800 — the previous higher low,” said Ponmudi R, CEO of Enrich Money, a SEBI-registered online trading and wealth tech firm.

Bank Nifty Respect its Ascending Channel

Meanwhile, the Bank Nifty continues to respect its ascending channel, but the index is now testing its lower trendline near 58,000, added Ponmudi.

“Going ahead, a decisive move above last week’s high of 58,577 would confirm a breakout continuation, paving the way for a rally towards 59,000 and 59,300, which correspond to the 138.2% Fibonacci projection of the recent correction (57,628–53,561),” said Bajaj Broking.

Support and Resistance Levels

For the index, immediate support is seen around 57,300–57,500, aligning with the previous breakout zone, while a stronger support base lies near 56,800–56,500.

Nifty and Sensex Close in the Red

The Nifty ended in the red on Thursday closing below the 26,000 mark. At the close, the Sensex fell 592.67 points, or 0.70%, to 84,404.46, while the Nifty slipped 176.05 points, or 0.68%, to 25,877.85. The Nifty was down as much as 0.80% during the day at 25,845.25, while the Sensex was also down 0.81% to 84,312.65.

“Technically, after a gap-down open, the entire day market witnessed selling pressure at higher levels,” said Shrikant Chouhan, Head Equity Research, Kotak Securities.

Rupee Depreciates Against the US Dollar

The rupee depreciated 48 paise to close at 88.70 (provisional) against the American currency on Thursday on a strong US dollar, weak domestic markets, and a hawkish US Fed.

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Conclusion

In conclusion, the Nifty index is currently witnessing a phase of consolidation after a strong rally. While the broader market structure remains bullish, the index is facing resistance at 26,000 levels. A decisive breakout above 26,100 could open the door for a retest of the previous all-time high at 26,277 and potentially extend gains towards 26,500. As the markets continue to evolve, it is crucial for investors to stay informed and adapt to the changing trends and developments.