Nifty Struggles for Direction as Lower-High Formation Caps Upside Momentum

Introduction

The Nifty50 continued to lack directional clarity on Thursday, extending its lower-high formation and failing to sustain intraday rebounds. Persistent selling pressure at higher levels and a narrow trading range between key moving averages have kept the index in a phase of consolidation. Despite closing almost flat, market behaviour signals weakening bullish momentum and heightened caution among participants.

Price Action: Lower-High Structure Restricts Upside

Nifty once again attempted to move higher but struggled to attract sustained buying interest. The index:

• Remains stuck between its 20-day and 50-day EMA, signaling ongoing indecision.
  
  
• Continues to form a sequence of lower highs, indicating fading upward strength.
  
  
• Closed marginally lower, down 3 points at 25,815.55, reflecting muted sentiment.
  
  

The index hovered around its 50-DEMA near 25,700, a historical make-or-break level. Intraday rallies continue to attract selling, with traders using rebounds to build fresh short positions. Unless Nifty decisively moves above 26,100–26,200, every rise is likely to be treated as a bull trap.

Technical View: Consolidation Persists

From a technical standpoint:

• Nifty remains range-bound between 26,220 (resistance) and 25,700 (support).
  
  
• The lower-high pattern reinforces 26,200 as the key level for any trend reversal.
  
  
• The RSI near 46 shows a neutral-to-cautious setup, indicating lack of strong directional conviction.
  
  

The price structure favours time-wise consolidation instead of a steep correction, but upside bias remains capped unless momentum returns above swing highs.

Derivatives Snapshot

The derivatives data highlights a cautious market tone:

Call Writing Dominates

• Fresh call writing is visible at ATM and nearby strikes, adding supply pressure.
  
  
• 26,000 strike holds nearly 1.30 crore call contracts, making it a major resistance zone.
  
  

Put Writing Shows Weakness

• Put writers have trimmed positions and shifted to lower strikes.
  
  
• 25,500 strike holds around 77.59 lakh put contracts, providing near-term support.
  
  

PCR Analysis

• The Put-Call Ratio (PCR) has risen slightly to 0.67 from 0.55.
  
  
• The increase reflects cautious positioning—not bullishness—as sellers maintain control at higher levels.
  
  

Market Outlook

The near-term market structure remains fragile, with:

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

Key observations:

• Selling continues on every pullback, with bears defending the 26,100–26,200 zone.
  
  
• The support zone of 25,800–25,700 remains crucial for sustaining short-term stability.
  
  
• A break above 26,200 may trigger a move toward 26,350, supported by short-covering.
  
  
• A break below 25,800 can invite fresh selling, dragging the index toward 25,700 and extending consolidation.
  
  

Conclusion

Nifty remains directionless as a lower-high structure and strong overhead supply restrict upside attempts. Technical indicators and derivatives positioning both point toward continued consolidation until the index breaks out of the 26,200 barrier. Traders should remain cautious and watch for decisive moves beyond the current range for any meaningful trend formation.