Nifty rebounds from demand zones to log a solid breakout, keeping the uptrend firmly intact

Nifty wrapped up the week on a strong note, rebounding steadily from lower zones, reinforcing a continuation pattern that supports further upside. The index closed decisively above the highs of the last three sessions, signalling a clear revival in bullish sentiment, aided by the positive monetary policy outcome. With a firm base now in place and higher lows consistently forming, the broader uptrend remains well-supported.

On Friday, the index gained 152.70 points to finish at 26,186.45, forming a robust bullish continuation candle while establishing a fresh swing low. Nifty has repeatedly found support at its 20-DEMA, triggering swift recoveries from this dynamic support level, reaffirming the trend's underlying strength.

Technical View

Nifty delivered a decisive breakout above its three-session range, driven by a strong bullish candle, confirming sustained upward momentum. By reclaiming levels above 26,150, a former resistance zone now acting as support, the index has opened the door for an advance toward 26,350.

On the downside, the 25,900–25,800 zone, which aligns with the 0.382–0.50 Fibonacci retracement cluster, forms a key demand pocket and a solid base for buyers.

In the near term:

• Immediate resistance: 26,350
  
  
• Strong support: 25,800
  
  
• RSI: The 14-day RSI hovering near 60 indicates strengthening bullish momentum.
  
  

As long as Nifty sustains above 25,800, dips are likely to attract fresh buying interest, keeping the uptrend intact.

Derivatives Snapshot

The derivatives setup indicates a constructive shift in sentiment:

• Put writers have aggressively added positions at at-the-money and near-term strikes.
  
  
• Call writers have partially unwound positions and shifted to higher strikes, reflecting expectations of continued buy-on-dips action.
  
  

Notable data:

• 26,200 strike: Nearly 1.05 crore call contracts, marking it as a major resistance level.
  
  
• 26,000 strike: About 1.73 crore put contracts, reaffirming strong support.
  
  
• PCR: Rebounded sharply to 1.19 from 0.80, highlighting renewed bullish positioning and dominance of put writers at lower levels.
  

Market Outlook

Nifty’s breakout above its immediate resistance and a sustained higher-low formation confirm the continuation of the prevailing uptrend. The index ended the week on a firm footing, supported by consistent buying from lower levels.

With the 20-DEMA and the Fibonacci retracement cluster forming a reliable demand zone, the buy-on-dips strategy remains well-supported. The repositioning of call writers to higher strikes and aggressive build-up by put writers at ATM levels indicates a bullish to optimistic bias.

• A sustained move above 26,330 could lead to the next leg of the rally toward 26,500.
  
  
• As long as the index trades above 25,800, bulls remain firmly in control.