Trading Plan: Can Nifty, Bank Nifty break out of their rangebound trading pattern?

The Nifty has been showcasing tepid performance, with prices oscillating within the range of the previous candle and displaying sluggish movement. The small candlestick bodies over the past two sessions highlight indecisiveness in the market. In last week's action, FPIs remained net sellers, reinforcing a cautious sentiment. Until the FPI brigade resumes its buying spree, volatility is likely to dominate market dynamics.

Options data reveal a formidable resistance zone at 23,800–24,000, marked by significant call writing, while robust support is observed at 23,500–23,600, bolstered by put writers aligning their positions near the 200-DEMA. For any credible recovery or reversal, the index must establish itself above the psychological threshold of 24,000, which serves as a key inflection point.

Weakening buying momentum, coupled with sellers capping gains at higher levels, underscores the index’s frail structure. A decisive breach below the current support zone (23,500–23,600) could trigger an intensified downward trajectory, amplified by unwinding pressure from buyers. Conversely, sustained buying interest may only materialize if the index breaks and holds above the 24,000 mark. Until then, the bearish undertone is likely to persist, with sellers maintaining their grip on the market.

Key Resistance: 23,900, 24,100, 24,300

Key Support: 23,500, 23,300, 23,000

Strategy: Traders can consider Nifty January futures below 23,650–23,670, with a stop-loss above 23,850, targeting between 23,400–23,350.

Ashish Kyal, CMT, Founder and CEO of Waves Strategy Advisors

The Nifty, for the past 13 consecutive days, has still not managed to close above the prior day’s high, with its low above the prior low and its high above the prior high. The three-candlestick rules have been bearish for 13 days in a row. Post the sharp selloff, prices are now consolidating in a range since the start of this week. There have been multiple failed attempts to break the 23,870 level on the upside. For any positive attempt, we need to see a breach above the 23,870 level for a pullback towards 24,070.

Volatility can again start increasing post the consolidation breakout. For now, one should trade cautiously. In the current market, it is best to create a bear strategy on options once the key level of 23,630 is breached, which will minimize risk and ensure riding the trend.

In summary, the overall trend for Nifty is to continue to sell on the rise unless prices close above 23,870, which will indicate a short-term pullback. A breach below 23,630, followed by 23,530, will signal the downward trend's resumption.

Key Resistance: 24,070

Key Support: 23,440

Strategy: Short positions can be created below 23,630 with a stop-loss of 23,720, targeting 23,530 followed by 23,440.

Vidnyan S Sawant, Head of Research at GEPL Capital

The Nifty has faced strong resistance at the 23,860 level over the past two days, forming indecisive candlesticks near the 200-day EMA. Last week, the index breached its three-week low and faced rejection at the 50% retracement level of 26,277 to 23,263. The downward movement signals caution in the near term, with the chart structure on both weekly and daily timeframes showing signs of weakness.

Key Resistance: 24,860, 24,200

Key Support: 23,200, 22,800

Strategy: Sell Nifty Futures below 23,580, with a stop-loss of 23,700, targeting 23,200

Preeti K Chabra, Founder of Trade Delta

The Nifty at 23,727 formed a narrow range (NR3) on the daily timeframe as it is stuck between the high—24,065—and low—23,537—of the candle created on December 20. However, it took support at the 200 DEMA—23,692—and the 23.6% Fibonacci level of 23,639, which is acting as a crucial support for the index. On the upside, the 38.2% Fibonacci level of 23,871 acts as immediate resistance for Nifty, followed by the next resistance at 24,059—the 50% Fibonacci level and 150 DEMA.

On the weekly chart, with last week's bearish Marubozu candle, Nifty has erased all the gains of the last four weeks and is currently forming a Doji, indicating indecisiveness between buyers and sellers at this moment. We see support for Nifty at 23,416 (50 EMA) and resistance at 24,256 (20 EMA) on the weekly chart.

Key Resistance: 23,871, 24,059

Key Support: 23,692, 23,639

Strategy: We see conditional trade in Nifty. If the Nifty decisively breaches 23,871, buy Nifty futures above 23,871 for a 24,059 target, with a stop-loss of 23,692. However, if it decisively falls below 23,692, sell Nifty futures below 23,692 for a target of 23,537, with a stop-loss of 23,871.

Bank Nifty - Outlook and Positioning

Dhupesh Dhameja, Derivative Research Analyst at Samco Securities

The Bank Nifty index continues to exhibit waning bullish momentum, characterized by sluggish price action confined within the range of the previous candles. The formation of small candlestick bodies over the past two sessions underscores prevailing indetermination in the market. Any attempts at recovery have been consistently met with selling pressure, hinting at the growing dominance of bears. The index is currently hovering near its psychological support zone of 51,000, a critical level. A breach below this mark could unleash intensified selling pressure, accelerating bearish momentum.

Options data further reinforces this cautious outlook, with pronounced call writing seen at higher strikes (51,700–51,800). This aligns with the formation of a "falling window" pattern, indicating a formidable resistance zone for upcoming sessions. As long as the index trades below the 52,000 threshold, the bears are expected to maintain their grip, with any upward move likely to be short-lived and viewed as an opportunity to initiate fresh shorts. A decisive breakdown below the current support level (51,000) could pave the way for sharper declines, fueled by unwinding pressure from buyers. On the flip side, sustained buying interest is only expected to re-emerge if the index surpasses the 52,000 level, reclaiming bullish territory.

Until such a recovery unfolds, the market is poised to remain under bearish control, with sellers dictating the direction.

Key Resistance: 51,800, 52,000, 52,300

Key Support: 51,000, 50,500, 50,000

Strategy: Traders can consider a conditional sell in January futures below 51,100–51,050, with a stop-loss above 51,400, targeting between 50,500–50,300.

Ashish Kyal, CMT, Founder and CEO of Waves Strategy Advisors

For the past three sessions, the Bank Nifty has been consolidating near the lower end of the Bollinger Bands. However, prices still have not given a close above the previous day’s high since December 16, keeping the daily trend on the negative side unless we see a close above the previous day's high. In summary, Bank Nifty is consolidating near the channel support. For now, a breach below 51,000 is a must for selling to resume, with targets of 50,513—a Gann level. On the upside, a breach above 51,420 followed by 51,500 can result in short-term pullbacks.

Key Resistance: 51,500

Key Support: 50,513

Strategy: Short positions can be created below 51,000, with a stop-loss of 51,300, targeting 50,700 followed by 50,513.

Vidnyan S Sawant, Head of Research at GEPL Capital

Bank Nifty remained rangebound on the weekly scale, with 49,700 serving as a critical support level, marking a potential shift from neutral to negative sentiment if breached. On the daily chart, the index has formed an inside bar pattern, indicating a contraction in volatility.

Key Resistance: 52,000, 53,200

Key Support: 50,500, 49,700

Strategy: Buy Bank Nifty futures above 52,000, with a stop-loss of 51,500, targeting 53,000.

Preeti K Chabra, Founder of Trade Delta

Bank Nifty at 51,233 is consolidating between the high—51,629—and low—50,609—of the candle made on December 20 and formed a narrow range (NR3) pattern on December 24. However, it took support at the crucial level of 150 DEMA—51,073. On the upside, the 38.2% Fibonacci level and high of December 24—51,382—and high of December 23—51,417—are acting as immediate resistance for Bank Nifty.

On the weekly chart, with last week's bearish Marubozu candle, Bank Nifty has erased all the gains of the last four weeks and is currently facing resistance at 51,534 (20 EMA) while taking support at 50,609, the low of last week.

Key Resistance: 51,382, 51,417

Key Support: 51,137, 51,073

Strategy: We see conditional trade in Bank Nifty. If it breaks 51,137 decisively, trade it for the target of 50,609, with a stop-loss of 51,382. However, if it breaks above 51,417 decisively, trade it for the target of 51,644 (100 DEMA), with a stop-loss of 51,137.

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