Trading Plan: Will Nifty 50 snap four-day losing streak, Bank Nifty reclaim 20-DEMA amid range-bound trading?

Nifty Trading Plan for December 19

The momentum indicators and the continuation of the lower high–lower low structure indicated caution in the Nifty 50 and Bank Nifty, but the formation of an inverted hammer–kind pattern (not a classical one) in the downtrend increased the possibility of a rebound. Whether the recovery is sustainable or not remains the key factor to watch. The Nifty 50 is expected to remain in the 25,700 (support) and 25,900–26,000 (resistance) range, as a decisive break on either side could provide directional clarity. Meanwhile, the Bank Nifty may attempt to reclaim the 20-DEMA (59,100). Above this level, 59,300–59,500 are the key levels to watch. However, a close below 58,700 (Thursday’s low)–58,600 could strengthen the bears, experts said.

On December 18, the Nifty 50 declined 3 points to 25,816, while the Bank Nifty fell 14 points to 58,913. Bears dominated market breadth, with about 1,771 shares declining against 1,047 shares advancing on the NSE.

Nifty Outlook and Strategy

Dhupesh Dhameja, Derivative Research Analyst at Samco Securities

The Nifty continued to struggle for direction, with every rebound attempt meeting fresh supply, keeping the index trapped in a subdued and choppy phase. The benchmark extended its lower-high sequence and remained confined between the 20-day and 50-day exponential moving averages, signalling fading upside momentum and persistent indecision. The 50-DEMA near 25,750 has emerged as a decisive pivot, repeatedly cushioning declines but failing to spark a sustainable recovery.

Technically, the index remains locked in a consolidation band, with sellers firmly defending the 26,100–26,200 resistance zone, while the 25,800–25,700 area continues to act as a near-term demand pocket. With momentum indicators staying neutral, the setup points toward time-wise consolidation, where rallies are likely to face resistance until a clear directional trigger emerges.

Key Resistance: 26,000, 26,150, 26,250

Key Support: 25,800, 25,650, 25,500

Strategy: Traders may consider initiating a Long Strangle strategy for the December 23 expiry by buying one lot of 25,850 Call (CE) at Rs 95 and one lot of 25,800 Put (PE) at Rs 85. This setup is designed to capture a potential sharp move in either direction in the coming trading session.

Stop-Loss: Hold this strategy strictly, with the maximum Mark-to-Market (MTM) loss capped at Rs 6,000 to ensure disciplined risk management.

Target: Hold this strategy, aiming for a maximum MTM profit target of Rs 12,000, while considering profit booking once MTM gains exceed Rs 6,000.

Jay Mehta, Technical Research at JM Financial Services

The Nifty has remained range-bound over the last 8–10 sessions, clearly oscillating between 26,150 and 25,680, bolstered by strong support from the 50-day EMA. Over the last eight sessions, it has tested and bounced from the 50 EMA five times, underscoring its defensive resilience. A clean break below 25,680 is essential to ignite bearish momentum; absent that, sideways to slightly bullish consolidation is likely in the near term.

Bearish risks persist due to momentum divergence, a rising wedge breakdown, and a bearish weekly candle at peak levels. Overall positioning points to a likely 300–400 point swing once the range resolves in either direction.

Key Resistance: 26,000, 26,150, 26,330

Key Support: 25,770, 25,680, 25,450

Strategy: Enter fresh longs or shorts only on a confirmed breakout or breakdown from the 26,150–25,680 range.

Sumeet Bagadia, Executive Director at Choice Broking

Currently, the Nifty 50 is trading within the 25,700–25,900 range, signalling a consolidation phase amid mixed market cues. This narrow trading band suggests a temporary equilibrium between buyers and sellers as the market awaits fresh triggers to establish a clear direction.

On the upside, immediate resistance is placed in the 25,900–26,000 zone. A sustained breakout above this area could open the path toward 26,200, reinforcing the broader uptrend. On the downside, support remains firm at 25,700 and 25,600. As long as the Nifty holds above the 25,500 mark on a closing basis, a cautious strategy remains advisable, with strict adherence to stop-loss levels until a clear breakout or reversal emerges.

Key Resistance: 25,900, 26,200

Key Support: 25,700, 25,500

Strategy: Buy Nifty Futures on dips near 25,880, with a stop-loss at 25,800 on a closing basis, for targets of 25,950–26,000.

Bank Nifty - Outlook and Positioning

Dhupesh Dhameja, Derivative Research Analyst at Samco Securities

The Bank Nifty continues to lose momentum at higher levels, with buying interest drying up quickly and sellers stepping in on even modest intraday recoveries. The index has slipped into a phase of fatigue, marked by a sequence of lower highs and sustained trade below the 20-day EMA, indicating that the earlier bullish impulse is fading. Price action remains anchored near the 58,600–58,800 zone, a repeatedly tested base that now serves as a decisive near-term pivot.

Structurally, the index is locked in a narrow range, with heavy supply clustered near the 59,500–59,700 zone, while options data highlights strong overhead resistance and cautious downside positioning. Unless the index reclaims the upper band convincingly, the prevailing setup favours consolidation, with risks tilted toward further time-wise erosion rather than a swift directional move.

Key Resistance: 59,300, 59,500, 59,700

Key Support: 58,800, 58,600, 58,400

Strategy: Traders may consider initiating a Long Strangle strategy for the December 30 expiry by buying one lot of 59,200 Call (CE) at Rs 354 and one lot of 59,000 Put (PE) at Rs 380.

Stop-Loss: Hold this strategy strictly, with the maximum MTM loss capped at Rs 7,500 to ensure disciplined risk management.

Target: Hold this strategy, aiming for a maximum MTM profit target of Rs 15,000, while considering profit booking once MTM gains exceed Rs 7,500.

Jay Mehta, Technical Research at JM Financial Services

The Bank Nifty has formed a short-term bearish structure. The latest session opened lower, initially suggesting a pattern breakdown, but reversed sharply from the open, trapping early bears. However, upside remains capped by multiple overhead resistances, restricting the potential for a sustained rally.

Bearish divergence persists, alongside a bearish weekly candle at record highs, indicating continued selling pressure at elevated levels. Bearish confirmation would require a decisive break below 58,700, with the next target at 58,500; a breach of this level could trigger 600–800 points of downside profit-taking.

Current positioning favours range-bound trading between 58,700 and 59,550, with momentum and volatility expected to rise on a clear break on either side of the range.

Key Resistance: 59,550, 60,120

Key Support: 58,700, 58,500, 58,000

Strategy: Initiate fresh longs or shorts only on a breakout or breakdown from the 59,550–58,700 range.

Sumeet Bagadia, Executive Director at Choice Broking

At present, the Bank Nifty is trading within the 59,200–58,700 range, indicating a consolidation phase as participants await a clear directional catalyst. This range-bound movement highlights a temporary balance between demand and supply in the near term.

Immediate resistance is placed at 59,200, and a sustained breakout above this level could pave the way for an advance toward the 59,500–59,700 zone, strengthening the bullish outlook. On the downside, key support is seen at 58,700, followed by 58,500.

As long as the index maintains a close above 58,700, a cautious trading approach remains appropriate. Traders are advised to adhere to strict stop-loss parameters until a definitive breakout or reversal pattern emerges.

Key Resistance: 59,200, 59,700

Key Support: 58,700, 58,500

Strategy: Buy Bank Nifty Futures on dips near 59,000, targeting 59,400–59,500, with a stop-loss at 58,800 on a closing basis.