Nifty Hits 3.5-Month Low: Key Support and Resistance Levels for January 21 Trading
Nifty 50 declined over 1% on January 20 to hit a three-and-a-half-month low near 25,160, forming a bearish candle with RSI entering oversold territory at 29.27. While experts expect a potential bounce-back, sustainability remains key with resistance at 25,300-25,400 and crucial support at 25,000-24,800. Bank Nifty also showed weakness, and market breadth remained bearish with 118 stocks showing short build-up against only 1 stock with long build-up.
*this image is generated using AI for illustrative purposes only.
The Nifty 50 experienced significant selling pressure on January 20, falling sharply by more than 1% to reach a three-and-a-half-month low near the critical 200-day EMA level of 25,160. The decline was accompanied by bearish technical indicators, subdued market breadth, and a rising India VIX, signaling increased market volatility and investor uncertainty.
Technical Analysis and Key Levels
The Nifty 50 closed at 25,233 after forming a long red candle on the daily charts, breaking down from a six-day consolidation phase with above-average volumes. This technical formation indicates rising selling pressure and bearish sentiment in the market.
| Technical Indicator | Current Level | Status |
|---|---|---|
| RSI | 29.27 | Oversold territory (below 30) |
| India VIX | 12.73 | Up 7.63% |
| 200-day EMA | 25,160 | Acting as immediate support |
| Put-Call Ratio | 0.72 | Declined from 0.77 |
For January 21 trading, the Nifty faces resistance levels at 25,488, 25,585, and 25,743 based on pivot points. Support levels are positioned at 25,172, 25,074, and 24,916. Experts suggest that while a bounce-back is possible after the severe correction, the sustainability of any recovery will be crucial to monitor, with resistance expected in the 25,300-25,400 zone.
Bank Nifty Performance
The Bank Nifty, closing at 59,404, also displayed weakness by forming a long bearish candle with minor upper and lower shadows. The banking index slipped below short-term moving averages and the midline of Bollinger Bands in a single session, with the RSI at 48.82 maintaining a bearish crossover.
| Bank Nifty Levels | Resistance | Support |
|---|---|---|
| Pivot Points | 59,832, 59,999, 60,270 | 59,289, 59,122, 58,851 |
| Fibonacci Levels | 59,842, 60,105 | 59,097, 58,737 |
Options Data Analysis
The options data reveals significant positioning in both Call and Put segments. For Nifty, the 26,000 strike holds maximum Call open interest with 1.31 crore contracts, acting as a key resistance level. Maximum Call writing was observed at the 25,500 strike with an addition of 87.14 lakh contracts.
On the Put side, the 25,000 strike shows maximum Put open interest with 77.36 lakh contracts, serving as crucial support. The maximum Put writing occurred at the same 25,000 strike, adding 21.57 lakh contracts.
Market Breadth and Positioning
The broader market sentiment reflected bearish positioning across derivatives:
- Long Build-up: Only 1 stock showed long build-up
- Long Unwinding: 88 stocks experienced long unwinding
- Short Build-up: 118 stocks saw short position build-up
- Short Covering: Only 4 stocks witnessed short covering
F&O Ban and Regulatory Updates
Currently, SAIL and Sammaan Capital remain under the F&O ban, with no new additions or removals on January 20. These stocks are banned when derivative contracts cross 95% of the market-wide position limit.
Outlook for Trading
With the Nifty trading well below the 20-, 50-, and 100-day EMAs and technical indicators showing strong bearish momentum, traders should closely monitor the 25,160 support level. The 10-day EMA has slipped below the 20- and 50-day EMAs, while the 20-day EMA has breached the 50-day EMA on the downside, confirming the bearish trend. Any recovery attempt will need to sustain above the 25,300-25,400 resistance zone to indicate a meaningful reversal in the current downtrend.
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