Nifty Clings to 50-DMA Support; Lower Highs Continue to Dominate – Range-Bound Trade Likely

The Nifty index attempted a mild rebound after testing its medium-term support levels, but the recovery lacked strength and failed to signal any meaningful trend reversal. The benchmark continues to form lower highs, reflecting persistent weakness at higher levels. Adding to the caution, the index closed below a crucial support zone, which has now turned into immediate resistance.

A key technical observation is that the Nifty is once again taking support near its 50-day Exponential Moving Average (50-DMA), a historically significant level that has triggered strong rebounds in the past. Holding above this zone remains essential to preserve the broader positive undertone.

On Tuesday, the Nifty slipped 120.90 points to close at 25,839.65, confirming a breakdown of a Head & Shoulder pattern on the hourly chart.

Technical Analysis: Lower Highs Persist, 50-DMA Holds the Line

While the index has broken down on lower timeframes, it is still hovering near its medium-term moving average, creating an indecisive price setup. The key levels to watch are:

• Immediate Resistance: 26,000 – 26,100
  
  
• Critical Support: 25,700
  
  
• Medium-term Support: 50-DMA
  
  

This defines a broad consolidation range, keeping the market in a range-bound and choppy phase. Until the index decisively moves out of this corridor, sideways action is likely to dominate.

The 14-day RSI remains below the 40 mark, indicating weakening bullish momentum and supporting the range-bound outlook.

Derivatives Snapshot: Cautious Positioning Dominates

The derivatives setup reflects a cautious stance from market participants:

• Call writers have added heavy positions at ATM and nearby strikes, signalling strong overhead supply.
  
  
• Put writers have partially exited and shifted lower, indicating expectations of consolidation.
  
  
• A notable 78.82 lakh call OI at the 26,000 strike reinforces this level as a stiff resistance.
  
  
• On the downside, 51.03 lakh put OI at the 25,500 strike, highlighting strong support.
  
  

The Put-Call Ratio (PCR) has inched up to 0.67 from 0.47, hinting at rising defensive positioning and cautious sentiment.

Market Outlook: Key Levels to Track

Despite the hourly trend breakdown, the Nifty continues to respect its 50-DMA support, keeping the broader structure mildly positive. However, the ongoing formation of lower highs, paired with selling pressure near 26,000–26,100, suggests that bulls still lack conviction.

• A sustained move above 26,000 could trigger fresh buying and push the index toward 26,350.
  
  
• A decisive break below 25,700 would weaken the broader uptrend and may drag the index toward 25,500 or lower.
  

Conclusion

The Nifty remains stuck within a broader consolidation zone, guided by the 50-DMA on the downside and persistent resistance near 26,000 on the upside. Until a clear breakout or breakdown emerges, traders should prepare for a range-bound, volatile, and level-driven market.