Nifty 50 forecast for January 20: Will the Doji candle lead to a reversal?

After a three-day rally, Indian markets took a downturn on Friday, January 17, 2025. The Sensex dropped by 423.49 points, closing at 76,619.33, while the Nifty 50 fell by 108.60 points, ending at 23,203.20. Analysts are predicting continued bearish pressure in the upcoming week, with crucial support and resistance levels set to dictate the index's movements.

Key Support and Resistance Levels for Nifty 50

Jatin Gedia, Technical Research Analyst at Mirae Asset Sharekhan, observed that the Nifty 50 faced resistance at the 40-hour moving average of 23,390. He suggests that the index may see a decline toward the psychological level of 23,000 and possibly dip further to 22,670. However, if the selling pressure eases, the index could consolidate within the range of 23,100–23,300.

Rupak De, Senior Technical Analyst at LKP Securities, also highlighted bearish sentiment on Friday, noting that resistance at 23,400 remains strong. He added, “If Nifty breaches 23,000 decisively, it could trigger a broader market correction. On the other hand, a move above 23,400 could shift the market sentiment toward the positive.”

Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, pointed out a small negative candle with a minor lower shadow on the daily chart, signaling weak momentum in the recent recovery. He also noted the formation of a doji candle on the weekly chart, which, if confirmed, could indicate a potential reversal.

Weekly Chart and Market Outlook

The appearance of a doji candle on the weekly chart suggests market hesitation and could potentially signal a reversal if confirmed. Osho Krishan, Senior Analyst at Angel One, highlighted that the Nifty's breakdown below its November low places the support zone between 23,000 and 22,900. Additional resistance lies between 23,500 and 23,600, with the neckline resistance around 23,350.

The daily chart's “Falling Wedge” pattern points to a critical support area, hinting at a possible recovery. However, analysts agree that a breach of 23,000 may pave the way for a more substantial correction.

Market Outlook for January 20, 2025

Investors are advised to closely monitor key support and resistance levels, as the sentiment remains pessimistic. A decline below 23,000 could prolong the current bearish trend, while a decisive move above 23,400 might spark renewed buying interest. Global cues, macroeconomic data, and corporate earnings reports are likely to influence market activity in the coming week.