Nifty Stuck Between Key Averages as Selling Persists on Rallies; 25,700 Emerges as Decisive Level

The Nifty 50 remained under pressure as persistent selling on intraday rebounds kept the index trapped within a narrow range. With prices now caught between the 20-day and 50-day exponential moving averages (DEMA), the index continues to show signs of fatigue after recent highs. The market’s struggle to break above crucial resistance zones highlights a cautious sentiment among traders.

On Wednesday, Nifty slipped 81.65 points to close at 25,758, confirming a head-and-shoulders breakdown on the hourly chart, a bearish pattern that reinforces short-term weakness. Yet, the index continues to draw support near the 50-DMA, a level that has historically triggered strong recovery attempts.

Technical Analysis: Consolidation Deepens as Nifty Tests Key Support

From a technical standpoint, Nifty remains in a lower-high formation, signaling a gradual loss of upward momentum. The index has fallen below a psychological level, turning previous support zones into immediate resistance.

Key technical observations include:

• Breakdown on the hourly chart

A clear head-and-shoulders breakdown on lower timeframes indicates sustained bearish pressure.

• 50-DMA acting as crucial support

Despite near-term weakness, Nifty continues to hover around the medium-term support of the 50-DMA, causing price indecision.

• Range-bound bias persists

• Resistance: 26,000–26,100 zone (aligned with 20-DEMA)
  
  
• Support: 25,700 remains the most critical zone, supported by both the 50-DMA and a previous gap support area
  
  

As long as Nifty oscillates between these levels, the broader market is likely to remain choppy and sideways.

• Momentum remains subdued

The 14-day RSI near 40 shows waning bullish strength and rising indecisiveness among buyers.
Immediate hurdles remain at 26,000, while 25,700 continues to act as a make-or-break area.

Derivatives Snapshot: Call Writers Tighten Control, PCR Signals Caution

The derivatives setup paints a cautious picture with aggressive positioning by call writers:

• Heavy call writing at 26,000

Nearly 1.34 crore call contracts are open at the 26,000 strike, forming a strong resistance wall.

• Put writers shift downward

Put writers have partially unwound positions and moved to lower strikes, confirming expectations of consolidation.

• Strong put support at 25,500

With 76.29 lakh put contracts, the 25,500 strike forms a solid support cushion in case the index weakens further.

• PCR dips to 0.54

A drop from 0.67 to 0.54 reflects rising caution and a tilt toward defensive positioning.
However, the PCR entering near-oversold territory also indicates the possibility of short-covering rallies.

Market Outlook: 26,000 Caps Upside; 25,700 Holds the Key

The Nifty continues to witness selling pressure on every bounce following the recent breakdown. However, strong demand near the 50-DMA has prevented a deeper decline so far.

What to watch ahead:

Bullish Trigger

A sustained breakout above 26,000 could revive bullish sentiment and open the gates toward 26,350, supported by short-covering.

Bearish Trigger

A decisive breakdown below 25,700 would weaken the broader trend and may intensify selling pressure, potentially dragging the index toward 25,500.

Until a clear breakout occurs on either side, traders should expect range-bound, volatile price action with selling emerging near resistance levels.