Nifty Breaks Key Fibonacci Level; Bank Nifty Approaches Crucial Support

The Nifty 50 has recently slipped below the crucial 61.8% Fibonacci retracement level of its previous rally from 21,743 to the all-time high of 26,373, signalling a weakening technical structure. In technical analysis, a break below this important retracement level often suggests that the market may require additional time to form a sustainable bottom.

Another factor adding pressure to the market is the sharp volatility in crude oil prices, which have moved above $100 per barrel. Higher crude prices often raise inflation concerns and can negatively impact overall market sentiment.

From a technical perspective, the Nifty continues to remain in a clear downtrend, with the pace of decline accelerating in recent sessions. Over the past 27 trading sessions, the index has corrected by more than 12%, making it one of the sharpest declines seen in recent months.

Weekly chart patterns also highlight persistent selling pressure. Over the past two weeks, the index has formed candles with long upper shadows, indicating that every attempt to move higher is being met with selling. This behaviour typically suggests that investors are using market rallies as an opportunity to reduce their positions.

Momentum indicators further confirm the bearish bias. The weekly RSI has slipped to 30.43, marking its lowest level since the COVID-19 market crash. Such weak momentum readings raise concerns that the correction may not yet be over. Given the current structure, any short-term rebound is likely to face resistance and attract fresh selling near key resistance zones.

Meanwhile, the Bank Nifty, which represents the performance of the banking sector, has also experienced significant weakness. The index has fallen nearly 13% in just 15 trading sessions, highlighting the sharp pace of the decline. In the past week alone, Bank Nifty dropped close to 7% and has broken below its rising channel on the weekly chart, indicating that the medium-term trend is shifting from consolidation to weakness.

Technically, the 53,400–53,200 zone is likely to act as an important support region as a horizontal trendline support is placed around these levels. However, if the index breaks decisively below 53,200, the selling pressure could intensify and drag the index towards 52,500, followed by 51,800 in the near term.

On the upside, any short-term relief rally is likely to face strong resistance in the 54,500–54,600 zone, which may act as an immediate supply area and trigger fresh selling.

Overall, both Nifty and Bank Nifty are currently trading with a weak technical setup, and unless the market shows signs of base formation and improving momentum, rallies may continue to face selling pressure in the coming sessions.