Nifty Weekly Outlook: Bearish Reversal in Play, 22,800 Crucial Support

Nifty Weekly Outlook: Bearish Reversal in Play, 22,800 Crucial Support

The Nifty 50 witnessed a sharp sell-off last week, forming a long bearish candle on the weekly charts, signaling a potential downside reversal. The index failed to hold above 23,000, extending its losing streak for the eighth consecutive session. The emergence of a lower-top, lower-bottom pattern on both daily and weekly charts further confirms a bearish sentiment in the market.

Key Levels to Watch

Immediate Support: 22,800

Next Support Zone: 22,670 – 22,600 (lower end of the wedge pattern)

Major Resistance: 23,250 – 23,300 (21-Day SMA and heavy Call OI zone)

A decisive break below 22,800 could accelerate the decline towards 22,450 (20-month EMA). On the flip side, any bounce back will face strong resistance around 23,000-23,300, where significant Call writing has been observed.

Derivative Data Insights

Highest Call OI: 23,000 & 23,100 strikes – indicating resistance

Highest Put OI: 22,800 & 22,900 strikes – key support area

Trading Strategy for Monday

1. Bearish View: If Nifty sustains below 22,800, traders can initiate fresh short positions with a target of 22,600-22,450, keeping a stop-loss at 23,000.

2. Bullish Reversal: A strong bounce above 23,300 with volume confirmation can trigger a short-covering rally towards 23,500-23,600, but the upside remains capped until call writers unwind their positions.

3. Option Traders:

Bearish bias: Consider buying 22,800 or 22,700 Put options for downside targets.

Range-bound play: Sell 23,000 Call and 22,800 Put to benefit from consolidation.

Market Sentiment & Cues

Global uncertainties, including potential tariff policies from the U.S., have added to the bearish pressure on Indian markets. With FIIs continuing their selling spree, traders should remain cautious and follow a disciplined risk management approach.

Conclusion: Nifty remains weak with a bearish structure. Any relief rally should be used to sell into strength unless the index decisively clears 23,300. Keep an eye on global cues and FII flows for further confirmation.

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