Nifty stays trapped in a tight range as lower-high structure curbs upside

Nifty traded with a muted tone on Wednesday, extending its sequence of lower highs while remaining tightly compressed between the 20-DEMA and 50-DEMA. This narrow band highlights persistent near-term choppiness, with the index once again hovering around its 50-DEMA, a level that has historically acted as a key springboard and is now a make-or-break zone near 25,750.

The benchmark slipped 41.55 points to close at 25,818.55, reflecting a gradual loss of bullish momentum. Intraday recovery attempts continue to be sold into, indicating that traders are either booking profits or initiating fresh shorts at higher levels. Unless the index registers a decisive move above the recent swing-high zone of 26,100–26,200, any upside attempt is likely to turn into a trap for longs.

Technically, Nifty remains stuck in a consolidation phase, with a well-defined trading range between 26,220 (resistance) and 25,700 (support). The prevailing lower-high structure keeps 26,200 as the critical inflection point for any meaningful trend reversal. Momentum indicators echo the neutral setup, with the RSI hovering near the midpoint around 50, signalling time-wise consolidation rather than a deeper price correction.

Derivatives Snapshot

The derivatives landscape shows increased caution among market participants.

• Call writers have aggressively added positions at at-the-money and nearby strikes, reinforcing overhead supply.
  
  
• Put writers have partially unwound positions and shifted to lower strikes, indicating expectations of an extended consolidation.
  
  

A heavy call OI build-up of 1.68 crore contracts at the 26,000 strike makes it a stiff resistance zone. On the downside, around 69.36 lakh put contracts at the 25,500 strike offer strong support.

The PCR has dipped to 0.55, reflecting a rise in bearish or cautious positioning. While this suggests pressure at higher levels, the oversold nature of PCR also keeps the door open for intermittent short-covering in the coming sessions.

Market Outlook

Nifty continues to see selling on every rebound, keeping the index in a fragile near-term setup.

• Resistance: 26,100–26,200
  
  
• Immediate Support: 25,800–25,700
  
  

This zone will be crucial for maintaining stability.

The shift of call writing toward at-the-money levels, along with put writers migrating to lower strikes, reinforces the ongoing range-bound bias.

• A sustained breakout above 26,200 could revive bullish momentum and pave the way toward 26,350.
  
  
• A break below 25,800 may weaken the broader structure and trigger fresh selling, dragging the index toward 25,700 and prolonging consolidation.