Technical View: Nifty posts healthy consolidation breakout, crossing 25,200 crucial for further upside next week

Nifty Upward Journey

The Nifty 50 staged a spectacular performance on June 20, posting a strong consolidation breakout and rising more than 1 percent with significantly higher volumes. The fall in oil prices, following a signal from the United States to delay its decision on potential involvement in the Iran-Israel conflict, along with a further decline in India VIX, lifted market sentiment. The index snapped a three-day losing streak amid consolidation and closed above the 25,100 mark.

According to experts, if the benchmark index manages to surpass and sustain above the 25,200 zone, 25,300 becomes the immediate level to watch (the 78.6 percent Fibonacci retracement of the 26,277–21,744 move), followed by 25,500. However, 24,700 is expected to act as a key support level on the downside.

The Nifty 50 gained strength as the session progressed after initial volatility and extended its upward journey toward 25,136 in late trade. The index closed near its day's high at 25,112, up 319 points (1.29 percent), forming a long bullish candle on the daily charts. It climbed above short-term moving averages and the midline of the Bollinger Bands, signaling a positive trend.

On the weekly charts, the index formed a long bullish candle after sharp weakness last week and is now placed at the upper end of the broader high-low range. This is a positive indication, said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.

For short-term traders, according to Amol Athawale of Kotak Securities, the key support zones are now at 24,850 and 24,700. "As long as the market remains above these levels, the bullish sentiment is likely to continue, with an immediate target of 25,200. Above this, the market could move up to 25,400–25,500," he said.

Following Friday's rally, the 26,000 strike turned active again, with the maximum Call open interest placed at this level, followed by the 25,000 and 25,500 strikes. The maximum Call writing was also seen at the 26,000 strike, followed by the 25,400 and 25,600 zones.

On the Put side, the 25,000 strike holds the maximum Put open interest (acting as immediate support), followed by the 24,800 and 24,500 strikes. The maximum Put writing occurred at the 25,000 strike, and then at the 24,900 and 24,800 strikes.

This monthly options data signals a hurdle for the Nifty 50 at the 25,500 zone; however, the key support remains at the 24,800 level.

The Bank Nifty also reported a healthy performance on Friday, decisively breaking out of the previous 4–5 days' consolidation and climbing 675 points (1.2 percent) to close at 56,253. The index formed a long bullish candle on the daily timeframe and surpassed short-term moving averages.

An analyst at Bajaj Broking Research expects the banking index to maintain its positive bias and head towards 56,700 and 57,400 levels in the coming weeks. "The immediate bias remains positive above the 55,500 level. The daily 14-period RSI has generated a buy signal, which further validates the positive bias in the index," he said.

Meanwhile, the India VIX — the fear gauge — extended its southward journey for the fifth consecutive session, declining 4.09 percent to 13.67. As long as it sustains below the 15 zone, bulls may continue to find comfort.