Weekly Market Outlook: Nifty shows bearish signals; stay defensive amid resistance near 25,650

The Nifty continued its corrective spell for the sixth straight week, a losing streak not seen in over five years, as the index drifted lower within a relatively narrow range. The week saw Nifty oscillate in a 398-point range between 24,736 on the higher side and 24,337 on the lower side, reflecting muted volatility and a lack of directional conviction.

India VIX edged marginally higher by 0.48% to 12.03, indicating that sentiment remains calm despite the prolonged weakness. By the week’s close, the index ended with a net loss of 202.05 points, or (-0.82%).

We have a short week ahead, with Friday a trading holiday on account of Independence Day. The index structure remains weak in the near term. The recent peak near 25,650 marks a lower top, coinciding with a confluence of two important pattern resistances — one from a falling trendline drawn from earlier highs, and another from the upper boundary of a broad consolidation channel. This zone now acts as a strong supply area.

The market is still trading beneath this resistance cluster, with a mild downward slope visible in short-term averages. Any meaningful upside would require a decisive breakout above this confluence; conversely, sustained trade below 24,200, which is the 50-week moving average, could accelerate the corrective leg.

As we head into the new week, the Nifty is likely to see a soft or cautious start. Immediate resistance levels are placed at 24,500 and 24,850, while supports come in at 24,200 and 23,950.

The weekly RSI stands at 49.50. It has formed a new 14-period low, which is bearish, but remains neutral without any divergence against price. The weekly MACD has shown a negative crossover; it is now bearish and trades below its signal line.

Pattern analysis reveals that the Nifty is still respecting the downward-sloping resistance line from the previous top, which aligns with the lower-high formation near 25,650. The index is hovering below the 20-week moving average (24,496), and any violation of the 50-week average at 24,203 could invite deeper cuts, making the index incrementally weak from current levels. The inability to clear the confluence resistance despite multiple attempts highlights prevailing supply pressure.

Given the current setup, traders should remain defensive in their approach. Fresh aggressive longs should be avoided until the index breaks above the 25,000–25,100 zone on strong volumes. Short-term players may adopt a highly selective, stock-specific approach with strict stop-losses to protect capital. For now, protecting gains and managing exposure prudently is the preferred strategy as the market continues to consolidate with a downward bias.

(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of EquityResearch.asia and ChartWizard.ae and is based in Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)