Nifty Engulfed Below Key Averages Amid Rising Volatility

On July 24, 2025, the Nifty 50 ended lower by 0.63%, closing the session at 25,062.10. The day’s action led to the formation of a bearish engulfing pattern on the daily chart—typically a warning sign for further weakness in the near term. What makes the setup more concerning is the close below the 50-day Simple Moving Average (SMA), signaling that the short-term momentum remains under pressure.

Price Action Highlights Weakness

For the past few sessions, red candles have overshadowed green ones—both in size and consistency—indicating a clear lack of buying conviction. Despite brief recoveries, Nifty has repeatedly failed to close above key short-term resistance levels, particularly the 9-day and 20-day EMAs, which continue to act as a ceiling.

Momentum Indicators Confirm the Trend

The Relative Strength Index (RSI) has dropped to 47, slipping further below the neutral 50 level, and reflecting waning bullish momentum. Meanwhile, the MACD (Moving Average Convergence Divergence) continues to trade in negative territory with a widening gap below the signal line—a sign that bearish momentum may persist unless there’s a sharp reversal.

Volatility on the Rise

The India VIX settled at 10.72, and its steady rise suggests increasing market nervousness. Any spike here could amplify short-term volatility, especially if support levels are breached.

Key Levels to Watch for Nifty

• Resistance: 25,250
  
  
• Support: 24,950, followed by 24,880
  
  
• Next Support if broken: 24,700
  
  

A close above 25,250 would be crucial to reinstate bullish momentum. Until then, any upward move may be short-lived, and traders are advised to remain cautious with a defensive approach.

Bank Nifty Faces Resistance, Stays Range-Bound

The Bank Nifty index settled at 57,066.05, down 0.25% for the day. The index faced a strong rejection near the confluence of horizontal resistance and the rising trendline, failing to sustain above 57,300—a level that has consistently capped upside attempts in recent sessions.

Technical Picture: Hesitation at Higher Levels

While Bank Nifty continues to hold above its 50-day SMA, the daily candle shows equal open and high, pointing to hesitation near the day’s early highs. This pattern often reflects indecision or a lack of aggressive buying interest.

The RSI currently stands at 54, marginally below the signal line, indicating a pause in momentum. The MACD remains in the red with no signs of a bullish crossover yet—suggesting a possible slowdown or exhaustion of the recent upward trend.

Key Levels to Watch for Bank Nifty

• Resistance: 57,300 (critical), followed by 57,500 and 57,700
  
  
• Support: 55,750 (super trend support)
  
  

A firm close above 57,300 is necessary for the bulls to take charge. Until then, the index is expected to remain range-bound with a slightly negative bias.

Conclusion

Both Nifty and Bank Nifty are showing signs of fatigue at higher levels. With rising volatility, weakening momentum indicators, and failure to reclaim key averages, the short-term outlook remains under pressure. Traders should maintain a cautious stance and wait for confirmation through closing breakouts before taking directional positions.