Momentum Slips as Nifty & Bank Nifty Lose Grip – Time for Caution?

After an extended bull run, warning signs are emerging in the Indian equity markets. The week ended with Nifty and Bank Nifty suffering heavy selling pressure, pointing to a potential and imminent shift in momentum. Let's examine the key technical indicators, chart patterns, and what this means for traders and investors as risk levels rise.

Nifty Technical Overview: Breaking Below Key Levels

Daily Performance

• Closing: 24,968.40
• Change: -0.57%
• Weekly Change: -0.72% (third consecutive week of decline)

For the first time in several sessions, Nifty has closed below its 50-day Simple Moving Average (SMA) and formed a bearish candle for the second session in a row. This technical breach heightens caution, potentially signalling further downside volatility.

Key Technical Indicators

• A negative crossover—when a shorter-term moving average falls below a longer-term one—has appeared, hinting at short-term weakness.
• RSI: At 43, which is below the midpoint of 50. The Relative Strength Index (RSI) measures price momentum, and a value below 50 typically signals negative sentiment.
• MACD: The widening gap between MACD and signal lines—where the MACD measures trend strength—increases the signs of lost momentum.

Fibonacci Insights

Using Fibonacci retracement from the recent swing low of 24,473 to the high of 25,667. The index has already broken the 50% retracement at 25,070.

• It now hovers above the critical 61.8% level at 24,928.
• A breakdown below this could trigger a sharper move lower, dragging Nifty toward the 78.6% retracement near 24,728 and possibly opening the door to deeper losses.

Key Resistance and Support

• Resistance: 25,240 (a reclaim is needed to revive momentum)
• Support Zones: 24,928 ➝ 24,728

Strategy

Given mounting pressure and clear technical breakdowns, buy-on-dips now carries considerable risk. Traders should adopt a focused sell-on-rise approach until the index convincingly reclaims key moving averages. Defensive positioning is critical at this juncture.

Bank Nifty Technical Overview: Rising Wedge Breakdown

Daily Performance

• Closing: 56,283
• Change: -0.96%
• Weekly Loss: -0.83%

Bank Nifty opened with a gap down and slipped below the rising trendline of a 'rising wedge' pattern. A rising wedge is a chart shape that can signal that upward momentum is fading, and the latest move suggests sellers have taken control.

Moving Averages & Trend

• The index has closed below the 9-EMA and 20-EMA, referring to certain moving averages (for example, the 20-day and 100-day), signaling short-term bearishness.
• However, it is still above the 50-day SMA, which may provide temporary support.

Indicators Say...

• RSI (Daily): At 45, shows clear deterioration.
• RSI (Weekly): At 61, still resilient – the broader trend is intact.
• MACD: The daily chart shows a negative crossover—this means the short-term momentum line has crossed below the signal line, a sign of increasing weakness.

What Rising Wedge Breakdown Means

A rising wedge pattern often leads to sharp downside if not reversed. When this chart pattern breaks down, it suggests that sellers are gaining the upper hand and prices are likely to weaken in the coming sessions.

Levels to Watch

• Immediate Resistance: 56,700
• Support Zone: 55,700
• A sustained drop below 55,700 could accelerate the correction, exposing Bank Nifty to deeper and potentially swift losses. Immediate caution is warranted.

Strategy

The tone for Bank Nifty has turned decisively cautious. Traders should use a sell-on-rise strategy while the index remains below the 20-day average. Any aggressive longs could result in significant losses at this time.

Conclusion: Is a Deeper Correction Coming?

Both Nifty and Bank Nifty are flashing strong signals of exhaustion and vulnerability. With key moving averages broken and negative crossovers on short-term charts, the risks of a deeper correction are increasing sharply. Traders must exercise maximum caution going forward.

Unless Nifty reclaims 25,240 and Bank Nifty 56,700, momentum remains squarely at risk. For now, defensive strategy and avoiding aggressive longs are essential to help shield portfolios from significant downside. The market environment has turned hazardous; caution is paramount