Banknifty - Mid Week Analysis - 30th Jul'25

 Disclaimer: This analysis is for educational and informational purposes only. It is not financial advice. Trading in financial markets involves significant risk, and you should consult with a qualified financial advisor before making any investment decisions.

Executive Summary & 1-Week Trend Prediction

Based on the daily chart, Bank Nifty has exhibited strong signs of a bearish reversal after forming a potential double top pattern near its all-time highs. The large bearish candle on the last trading day indicates aggressive selling pressure and a breakdown from a consolidation range.

Prediction for the Next 1 Week: The trend for the next week is likely to be bearish to sideways-with-a-bearish-bias. The immediate path of least resistance appears to be downwards. The index is currently testing a critical support level around 56,000. A decisive break below this level would accelerate the downward momentum, targeting 55,000 and 54,200. Any upward bounce is likely to face strong resistance near 56,800-57,000.

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Key Technical Levels

Level Type	Value	Basis
Resistance 1 (Minor)	56,800 - 57,000	This was the support of the recent consolidation range, which has now been broken. It will act as immediate resistance (resistance-turned-support principle).
Resistance 2 (Major)	57,800 - 58,000	The all-time high and the peak of the double top pattern. This is the primary psychological and technical resistance.
Support 1 (Critical)	56,000 - 56,150	Current price level. This was the previous major swing high (breakout level) before the final rally. It is a crucial support zone.
Support 2	55,000	A psychological round number and a minor support level visible from previous price action.
Support 3 (Major)	54,000 - 54,200	The next significant swing low and aligns with the 38.2% Fibonacci retracement level of the prior major uptrend.

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Detailed Technical Analysis with Basis

1. Price Patterns

• Basis: The most prominent pattern is a Double Top or a Ranging/Distribution Top formed between 57,000 and 57,800. The price failed to make a sustained new high and has now broken down below the range's support.

• Implication: This is a classic bearish reversal pattern, signaling that the preceding uptrend has lost momentum and sellers are taking control. The last candle is a Large Bearish Marubozu-like candle, which closed near its low, indicating strong selling pressure throughout the session.

2. Elliott Wave Theory

• Basis: The rally from the lows (around 48,500) to the peak (around 57,800) can be interpreted as a completed 5-wave impulse move. The peak at ~57,800 would mark the end of Wave 5.

• Implication: According to Elliott Wave principle, after a 5-wave impulse, a 3-wave correction (A-B-C) follows. The sharp decline we are witnessing is likely the beginning of Corrective Wave A. This wave is typically sharp and strong. This theory supports further downside.

3. Fibonacci Ratio Analysis

• Basis: Drawing a Fibonacci retracement from the start of the last major up-move (approx. 48,500) to the recent high (approx. 57,800):

  • 23.6% Retracement: ~55,600

  • 38.2% Retracement: ~54,250

  • 50.0% Retracement: ~53,150

• Implication: The price is currently falling towards the 23.6% level. A break below the current support at 56,000 would open the door for a fall towards the 38.2% level at 54,250, which is a common target for a first corrective wave and aligns with structural support.

4. Moving Averages (10 & 30 MA Crossover)

• Basis: Although the MAs are not plotted, we can infer their behavior. During the strong uptrend, the price was consistently above both the 10-day and 30-day moving averages.

• Implication: The recent sharp drop has most likely pushed the price below the 10-day MA. It is now likely testing or approaching the 30-day MA. A daily close below the 30-day MA would be a significant bearish sign. A bearish crossover (10 MA crossing below 30 MA) could occur in the coming days if the decline continues, which would confirm a medium-term trend change.

5. Indicator and Oscillator Analysis (Inferred)

• RSI (Relative Strength Index): At the peak (~57,800), the RSI was likely in the overbought territory (>70). It's possible a bearish divergence formed (price made a similar/higher high while RSI made a lower high), which is a powerful reversal signal. The current drop has pulled the RSI sharply downwards, confirming a loss of momentum.

• MACD (Moving Average Convergence Divergence): A bearish crossover (where the MACD line crosses below the signal line) has likely just occurred or is about to. This signals a shift in momentum from bullish to bearish.

6. Trendline and Channel Analysis

• Basis: An upward-sloping trendline connecting the lows of the recent rally has clearly been broken by the recent sharp fall.

• Implication: A break of a key trendline is a primary signal that the prevailing trend is changing. The price is now in a corrective or downtrend phase.

7. Gann Theory and Gann Angles

• Basis: The prior uptrend was very steep, likely breaking above the primary 1x1 Gann Angle. A break below such a steep uptrend angle indicates a sharp reversal. The price will now tend to fall towards the next support angle or key Gann price levels (which are often squares of key numbers).

• Implication: The current level of 56,000 is a key psychological level. Gann analysis would suggest that a break below this could lead to a swift move to the next harmonic level, potentially near 54,000.

8. Pivot Point Analysis

• Basis: For the next trading session, the Central Pivot Point (CPP) will be calculated based on the last candle's High, Low, and Close. Given the large red candle, the next day's pivot will be significantly lower than the previous day's.

• Implication: The price is likely to open below the CPP. The key levels identified as support (56,000, 55,000) will align with the Support Pivots (S1, S2), and the resistance levels (56,800) will align with Resistance Pivots (R1). This framework confirms the bearish outlook.

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Suggested Trading Strategy (Bearish)

This strategy is for educational purposes and based on the analysis above.

• Strategy: Short Selling (Bearish View).

• Entry:

  • Aggressive Entry: Short on a decisive break and close below the critical support of 56,000.

  • Conservative Entry: Wait for a minor pullback towards the resistance zone of 56,500 - 56,800. If the price shows rejection (e.g., forms a bearish candle in a lower timeframe), initiate a short position.

• Stop-Loss: Place a stop-loss above the broken consolidation zone, for example, at 57,100. This level would invalidate the immediate bearish breakdown thesis.

• Target:

  • Target 1: 55,000 (Psychological Level).

  • Target 2: 54,200 (38.2% Fibonacci Retracement & Structural Support).

Disclaimer: This analysis is based on the provided chart and is for educational and informational purposes only. It is not financial advice. Trading in financial markets involves significant risk. Always conduct your own research and consult with a qualified financial advisor before making any investment decisions.