Technical View: Bearish Engulfing formation signals consolidation until Nifty decisively takes out 26,100 hurdle, Bank Nifty fails to hold 59,000 again

Nifty outlook for November 19

The Nifty 50 saw profit booking after a six-day winning streak, falling four-tenths of a percent on November 18, during the weekly F&O expiry session. The index failed for the third time since last week to defend the 26,000 mark, as it continues to face supply pressure as it approaches the 26,100 hurdle (October high). Hence, as long as it trades below this zone, consolidation and range-bound trading may persist, with support around the 25,800–25,700 levels. However, only surpassing and sustaining above this zone could drive the index toward 26,300 (near the record high), according to experts.

The Nifty 50 started the day flat and could not sustain above 26,000 for most of the session, closing 103 points lower at 25,910. The index formed a long bearish candle, resembling a Bearish Engulfing pattern on the daily timeframe. This bearish reversal pattern needs to be confirmed in the following session.

In an uptrend, this typically indicates consolidation before a fresh leg of an upward move. As long as the index sustains above all key moving averages and the midline of the Bollinger Bands, the trend remains favourable for bulls. The RSI tilted downward but still held above the 60-zone.

"A long bearish candle has formed on the daily chart, indicating a strong hurdle around the 26,000–26,100 levels. Hence, short-term consolidation is possible before a decisive breakout of the resistance in the near term," said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.

According to him, the near-term uptrend for the Nifty remains intact, and any short-term consolidation or weakness is likely to end in the next couple of sessions. "Further weakness from here could find support around the 25,800–25,750 levels, and one may expect a bounce back from these lows," he added.

The monthly options data indicated that the 26,000 level is expected to be a crucial zone for further directional movement in the Nifty 50. Until then, the index may remain range-bound with key support at the 25,500 level.

The 26,000 strike still holds the maximum Call open interest, followed by the 26,500 and 26,200 strikes. The maximum Call writing is at the 26,000, 26,500, and 26,300 strikes, while the maximum Put open interest is placed at the 26,000 strike, followed by the 25,500 and 25,900 strikes. The maximum Put writing is at the 26,000, 25,500, and 25,200 strikes.

Bank Nifty

The Bank Nifty also retreated some gains, declining 63 points to 58,899 on profit booking and forming a bearish candle with upper and lower shadows on the daily charts, indicating some weakness amid volatility. The index tested a new record high of 59,104 during the day but could not sustain above 59,000 for another session due to pressure at higher levels.

Overall, the Bank Nifty has relatively outperformed the frontline indices, showcasing resilience despite broader market weakness. The price action indicates that the banking sector continues to hold strength, even as profit booking weighs on other sectors.

"Going forward, the 59,100–59,200 zone will act as a critical hurdle for the index. A decisive and sustainable move above 59,200 could trigger a sharp upside rally, opening the path toward 59,600, and potentially 60,000 in the short term," said Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities.

On the downside, the 58,600–58,500 zone remains an important support area. A breach of this zone may lead to further weakness, but as long as the index holds above these levels, the overall trend remains constructive, he added.

Meanwhile, the India VIX, the fear index, climbed 2.61 percent to the 12.1 zone, causing some discomfort for bulls. However, as long as it sustains below the 13 level, the bulls may not face major discomfort.

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