Technical View: Breaking of 20-DEMA, weak momentum signal bearish trend for Nifty, bears could target breaching 25k next week

Nifty Outlook for Next Week

The Nifty 50 remained under the control of bears after a gap-down opening and closed 0.8 percent lower on July 11, marking a negative start to the new weekly series. The index fell below the 20-day EMA as well as the midline of the Bollinger Bands (20-day SMA — both were slightly above 25,300 in the previous session), which generally act as key support zones. Combined with bearish signals from momentum indicators, this suggests that bears may be gradually gaining control over the market.

The next support is placed at 25,000, followed by 24,800, which is considered a crucial support zone (the low of the last long bull candle). On the upside, 25,300 is now the resistance to watch, according to experts.

The Nifty 50 opened below 25,300 at 25,256 and extended its correction as the session progressed. It remained below 25,200 from late morning onward amid rangebound trading and eventually closed at 25,150—its lowest closing level since June 24—down 205 points (0.81 percent).

The index formed a bearish candle with an upper shadow on the daily chart and continued its lower highs–lower lows formation for another session. The RSI weakened further to 48.75, entering the lower band, while the Stochastic RSI moved into the oversold zone. The MACD maintained its negative crossover, showing further weakness in the histogram.

On the weekly timeframe, the index formed a long red candle, falling 1.22 percent, and closed below the midpoint of the long bullish candle formed in the last week of June. This adds to the 0.7 percent correction from the previous week.

“After a long time, Nifty slipped below the 20-day SMA zone, which supports further weakness from current levels. We believe that as long as the market remains below 25,300, the weak sentiment is likely to continue,” said Amol Athawale, VP–Technical Research at Kotak Securities.

According to him, if the index remains below this level, it could slip to the 50-day SMA near 25,000. Further downside may also be seen, potentially dragging the index down to 24,800–24,650.

Conversely, if the market trades above 25,300, sentiment could improve and the index may rise toward 25,550–25,650, he added.

The weekly options data also indicates that the Nifty may face resistance at 25,300, with support at 25,000.

On the Call side, maximum open interest was seen at the 25,500 strike, followed by 25,300 and 25,400 strikes. Maximum Call writing was recorded at 25,300, followed by 25,200 and 25,500.

On the Put side, the 25,000 strike holds the maximum open interest, followed by 25,200 and 24,500. The most active Put writing was seen at 25,000, followed by 25,200 and 25,150 strikes.

The benchmark Bank Nifty index fell 201 points to close at 56,755 but managed to take support near the previous week’s low around 56,600. The index formed a bearish candle with a long upper shadow and a small lower shadow on the daily chart, indicating ongoing weakness, though some buying emerged at lower levels. However, selling pressure was still evident at higher levels.

For the week, the index declined 0.5 percent and formed a small bearish candle with a long upper shadow on the weekly chart.

Currently, Bank Nifty is hovering near its 20-day EMA at 56,730, reinforcing the view that the trend is at a crucial inflection point. Momentum indicators suggest a lack of conviction. The daily RSI remains in a sideways zone, according to RSI range-shift principles, further confirming ongoing consolidation.

Looking ahead, “The zone of 56,200–56,300 will act as immediate support for the index. On the upside, the 57,100–57,200 zone will be a crucial hurdle. A decisive breakout in either direction will lead to a trending move in the index,” said Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities.

Meanwhile, the India VIX remained in the lower zone but rebounded after three consecutive days of decline, gaining 1.24 percent to 11.82 on Friday. For the week, however, it was down 4.04 percent.