Technical View: Nifty 50 below 22,500 could strengthen bearish grip amid elevated VIX, oil prices; 54,400 crucial for Bank Nifty

The Nifty 50 decisively broke below the midline of the Bollinger Bands, placed at 22,755, after opening lower on October 22, and ended the session down half a percent. The index extended its decline for a third consecutive session, shedding nearly 500 points from its recent swing high of 23,175 recorded on October 19. The broader technical structure remains bearish, with the index trading well below all key moving averages.

Rising crude oil prices, which have touched a fresh five-month high, along with weakening momentum indicators, suggest that bears continue to dominate the market. The formation of a Doji candlestick pattern on the daily chart following the recent decline indicates indecision and the possibility of a trend reversal. However, confirmation in the next trading session will be crucial, particularly given the strong bearish positioning.

A break below the 22,550–22,500 zone could drag the index towards the crucial support band of 22,300–22,200. On the upside, the 22,800–22,900 range is likely to act as immediate resistance, followed by the psychological 23,000 mark, according to market experts. After opening lower, the Nifty 50 traded in negative territory throughout the session, despite intermittent recovery attempts. The index eventually closed at 22,688, down 124 points, or 0.54 percent.

Among momentum indicators, the Relative Strength Index (RSI) declined further to 43.98 but remained above its signal line. The Moving Average Convergence Divergence (MACD) indicator nearly flattened out but continued to trade above its reference line, while the green histogram bars contracted sharply for another consecutive session. Together, these indicators point to weakening bullish momentum and a deteriorating near-term outlook.

Market breadth also remained firmly in favour of the bears, with 2,347 stocks declining against 891 advancing on the NSE. The Nifty Midcap 100 and Nifty Smallcap 100 indices fell 0.87 percent and 1.14 percent, respectively, highlighting the broad-based nature of the sell-off. "The broad-based sell-off has intensified market weakness, with the technical outlook shifting from cautious to bearish front.

The Nifty50’s rejection near the 20-DEMA highlights persistent selling pressure, while escalating geopolitical tensions and their impact on crude oil prices continue to pose challenges for market participants," said Osho Krishan, Chief Manager – Technical & Derivative Research at Angel One. According to Krishan, the 22,600–22,500 zone is expected to provide immediate support. A decisive break below this crucial cushion could accelerate selling pressure, exposing the index to the next support band of 22,350–22,200.

On the upside, the 20-day exponential moving average (20-DEMA), placed around 22,800–22,850, remains a formidable resistance zone, followed by the crucial psychological hurdle at 23,000, he said. Monthly options data also point to the 22,500 strike as a crucial support level, as it holds the highest Put open interest. The 22,600 strike, which has the next-highest Put open interest, is expected to provide immediate support.

On the other hand, the 23,000 strike continues to attract the highest Call open interest, making it a critical resistance level. The 23,200 strike, which has the next-highest Call open interest, is likely to act as the next hurdle for the index. Meanwhile, the India VIX, a gauge of expected market volatility, rose 0.56 percent to 15.76, remaining elevated and warranting a cautious approach. After opening sharply lower, the Bank Nifty staged a healthy recovery from the day's low, recouping 466 points of its intraday losses before consolidating through the remainder of the session.

The index closed at 54,926, down 51 points, or 0.09 percent. On the daily chart, the index formed a sizeable green candle with noticeable upper and lower shadows, resembling a high-wave candlestick pattern, although not a textbook formation. The pattern indicates indecision and heightened volatility at current levels. Despite the recovery, the broader technical structure remains bearish, with the index trading well below all key moving averages, including the 10-, 20-, 50-, 100- and 200-day exponential moving averages (EMAs).

Momentum indicators also reflected continued weakness. The RSI fell to 43.05, slipping below its signal line, while the MACD continued to trend lower despite remaining above its reference line. The green MACD histogram bars contracted for the third consecutive session, indicating that bullish momentum continues to fade. "Going ahead, the 54,400–54,300 zone is likely to act as an important support area for the index.

A sustained breach below this zone may invite further selling pressure," said Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities. On the upside, the 20-day EMA zone of 55,300–55,400 is expected to act as a crucial resistance area. A decisive breakout above this zone or a breakdown below support is likely to trigger the next directional move in the index, he added.