Bank Nifty Forms Bearish Reversal Pattern; Fresh Upside Likely Only Above 59,500

The Nifty Bank index paused after its sharp upward run, witnessing noticeable profit-booking triggered by a broad global market selloff. The index formed a bearish Evening Star candlestick pattern on the daily chart, an early signal of near-term exhaustion. However, the index continues to hold above the crucial breakout neckline of 58,500, a level that remains pivotal in maintaining the broader bullish structure. After an extended one-way rally over the past week, the pullback appears healthy and expected, rather than a sign of deeper weakness.

On Friday, Bank Nifty declined 480 points to close at 58,867.70, reflecting persistent selling pressure through the session. Despite this, the index continues to maintain a sequence of higher highs and higher lows, suggesting that the dominant uptrend remains intact as long as key support zones hold.

Technical Outlook: 59,500 is the Level to Reclaim for Renewed Bullish Momentum

The formation of the Evening Star indicates temporary fatigue. To invalidate this bearish setup and resume strong bullish momentum, the index will need to sustain above the 59,450–59,500 zone. Bank Nifty continues to trade comfortably above the 10-day and 20-day EMAs, which may act as dynamic support during intraday dips.

Important Levels to Track

A decisive close above 59,500 could open the path to a fresh momentum-driven leg of the rally. Weakness would only deepen if the index breaks below 58,500. Until either side is violated, the setup suggests sideways consolidation.

Momentum indicators remain bullish, the 14-day RSI stays above 60, indicating continued strength.

Derivatives Snapshot: Market Participants Cautious Ahead of Expiry

The derivatives setup indicates a range-bound outlook, with strong positioning on both sides:

• Significant call writing near the 59,000 & 59,500 strikes
  
  
• Large put writing concentrated around 58,500
  
  
• Open Interest buildup:
  
  
  • 59,000 CE: ~ 15.10 lakh contracts
    
    
  • 58,500 PE: ~ 12.68 lakh contracts
    
    

The Put-Call Ratio (PCR) fell sharply to 0.88 from 1.20, indicating rising caution and cooling sentiment.

 Market Outlook

Bank Nifty faced pressure from global cues and printed a bearish reversal candle, but its ability to sustain above 58,500 keeps the broader bullish framework intact. With the index stretched above short-term averages, a controlled corrective phase remains likely.

The 58,500–59,500 range may dominate short-term price action:

• Break above 59,500 → next rally leg possible
  
  
• Break below 58,500 → short-term downside risk
  
  

Range-bound trade expected until a breakout