Nifty Index Breaks Out from Flag Pattern; Holding Above 25,500 Could Trigger Rally Toward 26,000

The Nifty index has sent a strong technical signal as it broke out of a falling channel (flag pattern)—a classic continuation formation that often precedes a fresh leg higher. After five sessions of subdued price action, the index finally managed to close above its previous day’s high, suggesting that bullish momentum is reasserting itself.

Nifty ended Tuesday’s session with a gain of 61.20 points, finishing at 25,522.50, not only confirming a breakout but also surpassing a key resistance level. With sustained strength above this zone, the market looks well-positioned for further upside, potentially toward the psychological milestone of 26,000.

Price Action Highlights:

• Breakout Confirmed: The Nifty broke out of its flag pattern, ending above the falling trendline and closing near the session’s highs.
• Intraday Recovery: A sharp rebound in the final 30 minutes, accompanied by rising volumes, underscores substantial accumulation and buying interest at lower levels.
• Support Structure: The 25,300–25,400 range has now emerged as a solid base. The 10-day EMA continues to offer support, fueling bullish confidence.
• Next Target: A strong intraday close above 25,600, backed by volume, could trigger aggressive short-covering and propel the index toward 26,000.

Momentum Indicators:

• RSI: Trending above 60, indicating healthy bullish momentum.
• MACD: Continues to display a positive crossover, indicating a potential continuation of the uptrend.
• India VIX: Down by 2.91% to 12.19, reflecting a low-volatility, low-fear environment that favors a grind higher.

Derivatives Snapshot: Cautious Optimism Builds

• Call Writers are still active at higher levels, particularly near 26,000, suggesting supply remains overhead.
• Put Writers have increased exposure around 25,400, reinforcing it as a firm support zone.
• Highest OI (Calls): 26,000 strike (1.26 crore contracts)
• Highest OI (Puts): 25,400 strike (1.08 crore contracts)
• Put-Call Ratio (PCR): Improved to 0.93, reflecting a mild bullish bias.
• Max Pain: Now at 25,500, suggesting this could act as the gravitational center heading into expiry.

Outlook: Momentum Likely to Build if 25,600 Is Breached

The technical breakout, improving PCR, and rising put writing activity all point toward strengthening bullish sentiment. However, a sustained move above 25,600 remains the key trigger that could unleash the next leg of the rally, with the 26,000 mark acting as a magnetic upside target.

Until then, the market is likely to remain in a measured upward drift, offering buy-on-dips opportunities within the 25,400–25,600 zone. Unless there’s a breakdown below 25,400, the broader structure continues to lean neutral to bullish.

Trading Strategy:

• Buy on dips near 25,400–25,440 with tight stop-losses.
• Watch for breakout confirmation above 25,600 for aggressive long entries.
• Avoid fresh shorts unless the price closes below 25,300 with substantial volumes.

Monitor volumes and RSI for confirmation of breakout sustainability.