Nifty Slips Below Key Supports; Double-Top Breakdown Hints at Extended Weakness

The Nifty 50 index continued its corrective trajectory, signaling the potential for deeper declines after confirming a breakdown from its double-top pattern. The index failed to close above the previous day’s high for the fourth consecutive session, underlining persistent selling pressure and reinforcing the prevailing bearish sentiment.

Every minor rebound attempt has attracted fresh supply, suggesting that sellers remain firmly in control of market direction.

Technical Overview: Breakdown Confirms Short-Term Weakness

On Tuesday, Nifty extended its downward momentum, closing 165.70 points lower at 25,597.65, marking yet another session of lower highs and lower lows. This consistent weakness signals growing caution among traders and investors.

The confirmed double-top breakdown has worsened the technical setup, hinting at an extended corrective phase in the coming sessions. The index now trades below the 20-day exponential moving average (20-DEMA), indicating a temporary pause in bullish momentum.

Unless Nifty decisively reclaims the 25,800–25,900 resistance zone, short sellers are expected to dominate, using rebounds as opportunities to re-initiate fresh short positions.

Key Levels to Watch

• Immediate Support: 25,520 (aligned with 38.2% Fibonacci retracement)
  
  
• Immediate Resistance: 25,750–25,800
  
  
• Major Resistance: 26,100 (swing high)
  
  

A sustained move below 25,520 could accelerate weakness and open the gate for further downside, while a decisive breakout above 25,800–25,900 would be needed to negate the bearish bias and restore short-term optimism.

Momentum Indicators: Bearish Bias Persists

• RSI (14): Around 52, indicating fading bullish momentum and limited upside potential.
  
  
• MACD: Trending lower and signaling weakness through bearish divergence.
  
  
• 20-DEMA: Price action staying below this average confirms a pause in the recent uptrend.
  
  

Overall, the technical sentiment remains cautious, with momentum favoring sellers in the short term.

Derivatives Snapshot: Call Writing Dominates, Signaling Defensive Tone

Derivatives data continues to paint a defensive picture.

• Call writers have actively added positions at higher strikes, especially at 26,000, which holds significant open interest (77.61 lakh contracts) — establishing a firm resistance zone.
  
  
• On the downside, put writers have shifted to lower strikes, with 25,200 seeing notable OI buildup of 51.90 lakh contracts, offering limited short-term support.
  
  

The Put-Call Ratio (PCR) has risen to 0.73 from 0.63, indicating cautious optimism, but the overall stance still favors bears near resistance levels.

This OI distribution clearly reflects that traders are hedging cautiously, anticipating potential volatility and limited upside momentum ahead.

Market Outlook: Sell-on-Rise Bias to Persist

Nifty continues to struggle for stability, with every minor bounce being met by renewed selling pressure. The breakdown from the double-top formation has turned previous support zones into fresh resistance, confirming a bearish-to-neutral outlook.

As call writers dominate higher strikes, the short-term bias remains weak, and traders should adopt a sell-on-rise strategy, particularly near resistance levels like 25,750–25,800.

A decisive move above 25,900 will be essential to revive bullish sentiment, while a fall below 25,520 could lead to an extended decline toward the 25,300–25,200 zone. Until then, caution is advised.

Key Takeaways

• Nifty confirms double-top breakdown, signaling extended weakness.
  
  
• Momentum indicators (RSI, MACD) show waning bullish strength.
  
  
• Resistance zones are shifting lower, indicating a short-term downtrend.
  
  
• Traders should follow a sell-on-rise approach and remain cautious ahead of key support tests.