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July 14, 2025
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2 min read
Daily Technical Breakdown
On Friday, the Nifty 50 index opened with a pronounced gap down and closed decisively below its downward-sloping trend channel, forming a large bearish candlestick on the daily chart. This technical break signals sustained downside pressure and raises the probability of further short-term declines in Nifty’s price action.
Key Moving Averages and Support Levels
The index settled at 25,149, trading below critical moving averages—most notably the 20-day Simple Moving Average (SMA) at 25,265, which also serves as the midline of the Bollinger Bands. With the next support coming at the 40-day Exponential Moving Average (EMA) of 25,018, traders should watch for a potential bounce or further erosion of these levels in the coming sessions.
Momentum Indicators
The daily Relative Strength Index (RSI) stands at 48.75, trending downward and positioned below its signal line. This momentum indicator reinforces the bearish sentiment in the market. “Additionally, Nifty broke below the 61.8% Fibonacci retracement level of 25,212, measured from the June 13 low (24,473) to the June 30 high (25,669), which further validates the ongoing corrective phase,” notes Preeti K Chabra, Founder of Trade Delta.
Weekly and Monthly Outlook
On the weekly timeframe, Nifty has formed a lower high–lower low pattern, confirming profit-taking at elevated levels. The weekly RSI has declined to 58.6, breaching its rising trendline and signaling early loss of bullish momentum. Despite this short-term weakness, the monthly chart remains structurally positive, as Nifty has posted higher highs and higher lows for four consecutive months, suggesting that the current pullback is a healthy correction within a broader uptrend.
Derivatives Insight
From a derivatives perspective, the unwinding of in‑the‑money (ITM) put options points to growing bearish sentiment among options traders. This behavior aligns with the technical breakdown and suggests that downside risks are being actively hedged or speculated upon.
Recommended Strategy: Bear Put Spread
Given the technical setup and rising bearish bias, Preeti K Chabra recommends deploying a Bear Put Spread on Nifty. This options strategy—buying an ITM put at a higher strike and selling an OTM put at a lower strike with the same expiry—allows traders to capitalize on an expected decline while limiting maximum risk to the net premium paid. By partially offsetting the cost of the long put with the short put premium, the Bear Put Spread offers a defined-risk approach to play a correction in the Nifty 50 index.
