Technical View: Nifty rebounds after 5-day losing streak, but momentum indicators and spiking VIX signal caution; 26,000 crucial for bulls to regain control

Nifty Outlook for January 13

• Nifty forms Piercing Line kind of pattern, bullish reversal pattern
• 26,000 likely to be key resistance with crucial support at 25,500
• India VIX jumps to 11.37, signals caution
• Momentum indicators remain weak

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The Nifty 50 started the week on a positive note, rebounding smartly after losing more than 2.5 percent over the last four sessions of the previous week. The index rose four-tenths of a percent but failed to close above the previous day’s high. Strong buying interest emerged from the day’s low, with the index reclaiming the 100-day EMA and forming a Piercing Line–type pattern (a bullish reversal pattern). This raised some confidence among bulls; however, momentum indicators still need to align for a stronger upside going forward. Hence, the sustainability of this rebound remains the key factor to watch.

The Nifty 50 needs to reclaim and sustain convincingly above the psychological 26,000 zone—which coincides with the 20-day EMA and the midline of the Bollinger Bands—for a further uptrend towards 26,200–26,300. Until then, consolidation may continue, with crucial support placed at 25,450, experts said.

The index opened below 25,700 and extended its downtrend to 25,473 but bounced back in the second half of the session and traded higher for the remainder of the day, closing 107 points (0.42 percent) higher at 25,790. The index formed a bullish candle with a long lower shadow on the daily charts, indicating a significant short-term turnaround in the market.

“This is a positive indication, and one may expect further upside in the short term. The underlying trend of the Nifty seems to have turned up following the sharp weakness seen last week,” said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.

Having recovered decisively from key lower levels, the Nifty could advance towards the next hurdle of 26,000–26,100 levels over the next few sessions, according to him.

However, the Nifty 50 index remains well below its short- and medium-term moving averages, although it has moved back above the 100-day EMA on a closing basis. The RSI rebounded to 42.84 but remains well below the reference line. The MACD continued to maintain a bearish crossover, while the histogram weakened further.

“On the hourly chart, the RSI has moved out of the oversold zone, indicating early signs of recovery. However, this half-session buying is not expected to change the overall market sentiment,” said Rupak De, Senior Technical Analyst at LKP Securities.

“We remain watchful, as the Nifty faces resistance in the 26,000–26,100 zone, where selling pressure may re-emerge. On the lower end, immediate and crucial support is placed at 25,650,” he added.

Weekly options data also suggest that 26,000 is expected to be a key resistance level for the Nifty 50, as it has the maximum Call open interest. On the downside, support is seen in the 25,700–25,500 range, where maximum Put open interest is placed.

Bank Nifty

The Bank Nifty also opened lower and slipped marginally below the 50-day EMA (58,900) intraday, as well as below support trendlines, but staged a strong comeback later in the session. The banking index rallied 199 points (0.34 percent) to close at 59,450 after a three-day losing streak and ended above the midline of the Bollinger Bands. It gained nearly 600 points from the day’s low of 58,864 but failed to close above the previous day’s high and continued to form a lower-low structure for the fifth consecutive session.

Momentum indicators are not showing strength, raising doubts over the sustainability of this rebound. The index needs to sustain above short-term moving averages and the midline of the Bollinger Bands for bulls to regain a strong presence; until then, consolidation may continue.

The RSI inched up to 51.4 but remains below the reference line, while the MACD continued with a bearish crossover and a further decline in the histogram.

“On the hourly chart, the RSI has entered a bullish crossover, suggesting improving intraday momentum. However, on the daily chart, the RSI remains weak. Given this mixed setup, a cautious stance is advisable,” said Vatsal Bhuva, Technical Analyst at LKP Securities.

According to him, immediate support for the index is placed at 58,900, while resistance is seen near the 59,500 level.

Meanwhile, the India VIX, which measures expected market volatility, signalled further caution and discomfort for bulls. It attempted to move towards its 200-day EMA (12.14) intraday before closing 4.05 percent higher at 11.37, extending its uptrend for the third consecutive session.