Technical View: Long-term trend remains positive; Nifty may consolidate if trendline support breaks, rising VIX signals caution

Nifty Outlook for January 6

• Momentum indicators remain positive; hence, the Nifty 50 is expected to regain strength in the upcoming sessions, provided it holds above 26,200. However, a decisive fall below this level could drag the index into a consolidation phase, experts said.

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The Nifty 50 snapped its three-day winning streak, witnessing some profit booking after hitting a fresh intraday record high, and closed about one-third of a percent lower on January 5. Despite this consolidation—partly led by concerns around the US–Venezuela situation—the index continued to sustain well above all key moving averages as well as above the trendline support at 26,200. This level had earlier acted as a resistance trendline, from where the breakout occurred to record highs.

Further, momentum indicators remain positive; hence, the index is expected to regain strength in the upcoming sessions, provided it holds above 26,200. However, a decisive fall below this level could drag the index into a consolidation phase, experts said.

The Nifty 50 touched a fresh record high of 26,373 in the morning session, but failed to hold those gains later in the day and closed at 26,250, down 78 points. The index formed a bearish candle with minor upper and lower shadows on the daily charts, indicating mild weakness amid volatility.

Momentum indicators and oscillators continue to remain in buy mode, signalling underlying strength. The MACD maintained a positive crossover, with the histogram rising further. The RSI dipped marginally to 58.79 but remained above the reference line, while the Stochastic RSI stayed above its signal line.

According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, the underlying trend of the market remains positive.

“Nifty is expected to bounce back from the important support zone of around 26,200–26,150 levels over the next one to two sessions. The near-term upside target to watch is around 26,700,” he said.

Nilesh Jain, Head – Technical and Derivatives Research (Equity Research) at Centrum Broking, also believes that some near-term consolidation is likely before the next leg of the up move.

“However, the broader structure remains strong, as the index has already confirmed a breakout from a symmetrical triangle pattern on the daily chart, with immediate support placed around 26,000,” he said. He expects the gradual uptrend to continue, with Nifty likely to move towards 26,600 levels in the short term.

The weekly options data suggested that Nifty may face resistance in the 26,400–26,500 zone, while support is placed at 26,200–26,000 levels.

The maximum Call open interest was seen at the 26,300 strike, followed by the 26,400 and 26,500 strikes, with maximum Call writing at the 26,300, 26,400 and 26,250 strikes. On the Put side, the 26,000 strike held the maximum Put open interest, followed by the 26,200 and 26,100 strikes, while the maximum Put writing was observed at the 25,700, 26,150 and 25,800 strikes.

Bank Nifty

The Bank Nifty also touched a fresh record high of 60,437, but witnessed profit booking and slipped 107 points to close at 60,044, snapping its four-day winning streak. The banking index formed a bearish candle with minor upper and lower shadows on the daily timeframe.

However, the broader chart structure remains positive, as the index has delivered a falling trendline breakout and continues to sustain above its short-term 10-day and 20-day EMAs. Additionally, the RSI is in a bullish crossover, indicating underlying momentum strength.

“As long as Bank Nifty sustains above the 20-day EMA, a buy-on-dips strategy can be adopted with a positive bias. Immediate support is placed at 59,700, resistance at 60,500, while positional support is seen near 59,300 levels,” said Vatsal Bhuva, Technical Analyst at LKP Securities.

Meanwhile, the India VIX, also known as the fear gauge, signalled some caution for bulls as it rallied 6.06 percent to 10.02, extending its uptrend for the second consecutive session. It also climbed above its short-term moving averages on the daily charts.