The Nifty Bank index wrapped up October on a positive note, marking fresh all-time highs. However, towards the end of the week, the index began to show signs of fatigue, signaling the possibility of a short-term correction in the coming sessions. After giving up part of its recent gains, Nifty Bank now trades near a crucial make-or-break level. A sustained move below Friday’s low of 57,650 could further dampen sentiment and shift momentum in favor of the bears.
Technical Overview: Market Shows Early Signs of Exhaustion
On Friday, the index closed lower for the second consecutive session, remaining below the previous day’s low. The formation of a shooting star candlestick on the weekly chart and the potential double-top structure near the 57,650 neckline reinforce a weakening technical setup.
From a broader perspective, Nifty Bank appears to be in a consolidation phase, as it has failed to sustain above its swing high of 58,500. The close below the 10-day exponential moving average (10DEMA) further confirms a pause in bullish momentum.
Unless the 58,500–58,600 zone is decisively reclaimed, sellers are expected to dominate the price action, using any intraday rebound as an opportunity to initiate fresh short positions.
Crucial Support and Resistance Levels
- Immediate Support: 57,650 – A breakdown below this level could confirm the double-top pattern, accelerating downside momentum.
- Key Resistance: 58,300–58,500 – A breakout above this range is necessary to restore bullish sentiment.
- Broader Range: 57,600 – 58,600
Momentum indicators echo a similar tone. The RSI (14) continues to hover above 60, but a break below this level could drag it lower, signaling weakening momentum.
Derivatives Snapshot: Caution Persists Among Traders
The derivatives data continues to paint a cautious picture. Call writers have built heavy positions at higher levels, while put writers have squared off earlier positions and moved to lower strikes — signaling a defensive stance.
- Open Interest (OI) at 58,500 Call Strike: 9.40 lakh contracts — indicating strong resistance.
- Open Interest (OI) at 58,000 Put Strike: 17.63 lakh contracts — reflecting support at lower levels.
- Put-Call Ratio (PCR): Dropped from 0.91 to 0.85, showing growing caution among traders.
The sharp increase in call writing highlights growing hesitation among market participants, while the reduced PCR suggests sellers currently hold stronger control over the index’s short-term direction.
Market Outlook: Sell-on-Rise Strategy Favored
Although the Nifty Bank index ended October at new highs, technical and derivative indicators suggest a pause in momentum. The appearance of a double-top pattern on the daily chart and a shooting star on the weekly chart points toward emerging weakness.
Unless Nifty Bank decisively breaks above 58,500, the market is likely to remain in a bearish-to-neutral structure. A follow-through move below 57,650 would confirm a short-term breakdown, potentially inviting further selling pressure.
Traders’ Strategy:
- Approach: Sell on rise
- Focus Zone: Shorting near resistance (58,300–58,500)
- Caution: Avoid aggressive long positions until a clear breakout above 58,500
Key Highlights
- Weekly Close: 57,776.35 (down 254.75 points)
- Immediate Support: 57,650
- Resistance Levels: 58,300 – 58,500
- Short-Term Bias: Bearish to Sideways
- Momentum Indicator (RSI 14): Hovering near 60 — showing weakening strength
Key Takeaway
The Nifty Bank index is currently in a consolidation phase after an impressive four-week rally. The technical setup suggests that sellers are using rebounds to add short positions, while buyers remain cautious amid overhead resistance. A decisive breakout above 58,500 will be essential to resume the bullish trend. Until then, traders should maintain a defensive approach and closely monitor the 57,650 level, which acts as the line in the sand for the next directional move.
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