Technical View: Nifty forms inside bar pattern after no follow-through selling, crossing 25,000 crucial for further upside

Nifty Outlook for August 26

The Nifty 50 index showed resilience by avoiding follow-through selling and successfully defending Friday's low (the upper end of the bullish gap zone), marking a strong start to the week on August 25. The index gained 0.4 percent after a nearly 1 percent loss on Friday.

As long as the index holds above 24,850—which was Friday's low and the upper end of the bullish gap formed on August 18—and maintains support at the key moving averages (20-day and 50-day EMAs), the upward journey towards 25,000 remains intact. This could be followed by a further move towards the 25,150–25,250 zone, which is expected to act as a key hurdle. However, a fall and sustained move below 24,850 could drag the index down towards the 24,800–24,700 levels, according to market experts.

On August 25, the Nifty 50 opened higher at 24,949 and climbed to an intraday high of 25,022. The index maintained an upward trajectory throughout the session and settled at 24,968—up 98 points—forming a small bullish candle with both upper and lower shadows within the previous day's long red candle on the daily chart.

This price action signals an absence of follow-through selling after Friday’s sharp decline, which is seen as a positive indication for the market.

Notably, the bullish breakaway gap created on August 18 has remained unfilled even after six trading sessions. This indicates continued bullish sentiment and potential for further upside in the near term, according to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.

He believes the next upside target to watch is around the 25,200–25,300 zone. On the downside, immediate support is seen at 24,800.

Monthly options data suggest that the 25,000 level is likely to be crucial for determining the next directional move in the short term.

The highest Call open interest is at the 25,000 strike, followed by the 25,500 and 25,200 strikes. Maximum Call writing has been observed at the 25,550 strike, followed by 25,400 and 25,450.

On the Put side, the 25,000 strike also holds the highest open interest, followed by 24,900 and 24,500. Maximum Put writing has occurred at the 25,000 strike, followed by 24,950 and 24,900.

Bank Nifty Update

The Bank Nifty index ended almost flat, slipping 10 points to close at 55,139 amid a phase of consolidation. It formed a Doji candlestick pattern on the daily timeframe, signaling indecision among bulls and bears. Despite this, the index held above its 100-day EMA (55,000), although it remained below its 20-day and 50-day EMAs, thereby underperforming the broader Nifty 50.

According to Sudeep Shah, Head of Technical Research and Derivatives at SBI Securities, the support zone of 54,900–54,800 will be crucial for the Bank Nifty.

“A sustained move below 54,800 could trigger further downside towards 54,400. On the upside, the resistance zone of 55,300–55,400 will act as a key hurdle for any recovery attempt,” he said.

Volatility Index

The India VIX, often referred to as the fear gauge, spiked intraday to 12.35 but ultimately settled lower, rising just 0.26 percent to 11.76. It remains below its short-term moving averages, which continues to indicate stable market conditions.

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