Technical View: Weekly chart pattern signals bears may tighten grip, 23,850 crucial for Nifty; VIX hits one-month high

Nifty Downtrend

The Nifty 50 extended its southward journey following the escalation in India-Pakistan tensions, closing over 1 percent lower on May 9. However, it managed to defend the 20-day EMA (23,981) on a closing basis.

The short-term market structure appears weak, with the index trading well below the 5-day and 10-day EMAs, while the India VIX reached a one-month high. According to experts, the index may consolidate further and attempt to take support in the 23,900–23,850 zone. A break below these levels could strengthen the bears, potentially dragging the index down to the next support zone at 23,600–23,500. On the other hand, in the case of a rebound, 24,200–24,400 will be the key resistance levels to watch.

The Nifty 50 opened 338 points lower at 23,936—which was also the day’s low—and remained rangebound during the mid to later part of the session before closing 266 points (1.1 percent) down at 24,008, amid high volatility. The index formed a small bullish candle with a long upper shadow on the daily charts, indicating an attempt at a downside breakout from the recent range-bound movement.

On the weekly timeframe, the index fell 1.4 percent and formed a long bearish candlestick resembling a Bearish Engulfing pattern (though not a classical one). The formation of such a pattern after a rally suggests a potential bearish reversal, but confirmation would be required in the following week.

“The geo-political tensions between India and Pakistan are weighing heavily on the market. Further weakness from here could find strong cluster supports around 23,800–23,600 (weekly 10/20-period EMA and support as per change in polarity). There is a possibility of an upside bounce occurring from the lows,” said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.

According to him, immediate resistance is placed at 24,200.

The weekly options data suggests that the Nifty 50 may trade in the broader range of 23,500–25,000, while the immediate trading range could be between 23,800–24,500.

The maximum Call open interest was placed at the 25,000 strike, followed by the 24,500 and 24,000 strikes. Maximum Call writing was seen at the 24,000 strike, followed by 24,100 and 25,000 strikes.

The 24,000 strike also holds the maximum Put open interest, followed by 23,500 and 23,800 strikes. Maximum Put writing was observed at the 24,000 strike, followed by 24,100 and 24,050 strikes.

Bank Nifty

The Bank Nifty also witnessed a sharp correction and formed a Doji-like candlestick pattern on the daily charts, indicating indecision among bulls and bears after the steep fall. The index closed below short-term moving averages (5, 10, and 20-day EMAs), signaling near-term weakness. The banking index dropped 770 points (1.42 percent) to settle at 53,595.

“For Bank Nifty, the 20-day SMA at 54,000 (which is also Friday’s high) will act as a trend decider for short-term traders. Below this level, the index could slip to 53,000–52,650,” said Amol Athawale, VP–Technical Research at Kotak Securities.

Conversely, according to him, a move above 54,000 could lift the index toward 54,800–55,000. Given the current uncertain and volatile market texture, he advised that levels-based trading would be the ideal strategy for short-term traders.

Meanwhile, the India VIX, which measures expected market volatility, continued its upward trend and reached a one-month high, signaling increased caution for bulls. It rose 2.98 percent on Friday to 21.63, its highest closing level since April 7. For the week, the VIX surged 18.5 percent, marking its third consecutive weekly gain.

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