The Nifty 50 snapped its two-day winning streak on October 19, reversing a significant portion of the gains recorded over the previous couple of sessions, as the index fell 1.1 per cent on the weekly F&O expiry day. This marked a weak start to the holiday-shortened trading week, with market participants turning cautious amid elevated oil prices and profit booking following the previous week's 2.8 per cent rally.
The index failed to sustain above its 20-day exponential moving average (EMA) and decisively cross the 38.2 per cent Fibonacci retracement level of the decline from 24,774 to 22,180. It subsequently retreated sharply, signalling a loss of short-term momentum.
Going ahead, the 22,800 level is expected to act as an immediate and crucial support for the Nifty 50, as it broadly coincides with the 23.6 per cent Fibonacci retracement level and the 10-day EMA. A break below this level could open the door for a correction towards 22,600–22,500. On the upside, the 23,000–23,200 zone is expected to act as a resistance area. A decisive move above this range could bring the bulls back into action, according to market experts.
The Nifty 50 opened on a flat note and touched an intraday high of 23,175 in early trade before reversing its gains. The index extended its losses as the session progressed, hitting a low of 22,845 in the final couple of hours of trade. It eventually settled at 22,889, down 257 points, or 1.11 per cent.
On the daily chart, the index formed a long bearish candle, indicating sustained selling pressure. The daily Relative Strength Index (RSI) moderated after reaching 52.81 in the previous session, although it continued to trade above its signal line, suggesting that momentum remained relatively stable despite the pullback.