Nifty Reclaims Key Moving Averages; Trendline Breakout Signals Strengthening Bullish Setup

The Nifty index staged a steady rebound from its intraday lows, closing higher for the third consecutive session, signalling a strong base formation around its confluence support zone near 25,350. The index also surpassed the crucial 25,500 resistance level, supported by persistent follow-through buying, reinforcing optimism for a continued upward trajectory.
This consistent pattern of higher closes over the last three sessions highlights sustained accumulation at lower levels and limited selling pressure from the bears.

Market Performance Overview

On Tuesday, the Nifty extended its gains by 120.60 points to close at 25,694.95, marking a higher-low formation and a decisive close above 25,500.
The breakout from the falling trendline further strengthens the improving technical structure, indicating that buyers are regaining control and that short-term sentiment is gradually turning constructive.

Technical Analysis: Bullish Signals Strengthen

From a technical standpoint, Nifty has reclaimed both its 10-day and 20-day exponential moving averages (DEMA) and witnessed a strong rebound from the 0.50 Fibonacci retracement level. Sustaining above these crucial markers underlines improving short-term sentiment and signals a potential shift toward renewed bullish momentum.

As long as the index holds above the 25,300–25,350 support zone, short-term traders are likely to remain active, viewing intraday dips as buying opportunities.

• Support zone: 25,300–25,350
  
  
• Immediate resistance: 25,800
  
  
• Breakout confirmation: Above 25,800 (may trigger fresh upside momentum)
  
  

Conversely, a fall below 25,350 would negate the current recovery trend and could invite renewed caution among market participants.

Momentum Indicators Reflect Positive Tone

Momentum indicators are also aligning with this improving market sentiment:

• The 14-day RSI continues to hover above the 50 mark, suggesting improving strength in the short-term structure.
  
  
• The MACD has narrowed its negative spread, hinting at a loss of downside traction and an increasing probability of a positive crossover in the coming sessions.
  
  

Hence, 25,350 remains a critical support, while 25,750–25,800 serves as a key resistance zone in the near term.

Derivatives Snapshot: Optimism with Caution

The derivatives setup reflects a cautiously optimistic sentiment.
Put writers have been aggressively adding open interest (OI) at nearby strikes, while call writers are simultaneously building exposure at higher levels, suggesting a consolidation phase with a positive bias.

• Highest Call OI: 26,000 strike (52.80 lakh contracts) → Firm resistance
  
  
• Highest Put OI: 25,600 strike (40.60 lakh contracts) → Strong support base
  
  
• PCR (Put-Call Ratio): Improved to 1.04 from 0.95, reflecting a mildly bullish undertone
  
  

This concurrent rise in both call and put writing points to a balanced market stance, with traders hedging both sides while maintaining a neutral-to-positive bias.

Market Outlook: Base Formation and Breakout Potential

The Nifty has displayed a commendable recovery, forming a sturdy base near its critical support zone and breaking out of its descending trendline — both of which strengthen the short-term technical outlook.

However, persistent FPI outflows over the last eight sessions in both cash and futures segments continue to inject a note of caution into the broader sentiment.

While call writers maintain dominance at higher strike prices, the aggressive addition of put positions at lower levels indicates a balanced tug-of-war between bulls and bears, keeping the near-term outlook neutral to range-bound.

• A decisive move above 25,800 will be crucial to reignite strong bullish momentum.
  
  
• A drop below 25,350 could reintroduce downside risks.
  
  

Until then, traders are advised to remain prudent, focusing on breakouts beyond the consolidation band while maintaining a disciplined and data-driven approach in the near term.