NIFTY – Monthly Analysis
This NIFTY Technical Analysis is open to everyone—no membership required. Given the importance of the August close, we are making the full report publicly available.
NIFTY’s August close reinforced the concerns we first outlined back in March. What once looked like a stable long-term advance is now facing growing technical pressure, and several signals suggest that the next phase could become increasingly important for the broader Indian stock market.
In this NIFTY 50 Technical Analysis, we examine the latest candlestick structure, momentum and technical signals, key support and resistance levels, and the Elliott Wave roadmap. The central question is whether NIFTY’s long-term bullish structure remains intact—or whether the cracks are beginning to widen enough to signal a much deeper correction ahead.
CANDLES & TA
NIFTY has been on my long-term watch since the end of 2025, when it failed to close the annual candle in a clearly bullish way. But more on that later.
In April, the index recorded a major long-term bearish signal by forming a powerful Bearish Engulfing on the 4-month frame. Bulls spent the next four months trying to negate that signal, but failed by the end of August. In this context, the 4M Doji should be viewed as neutral-bearish.
The monthly frame also showed a clear bullish failure. The Dark Cloud Cover formed in August effectively capped the five-month bounce and pushed the index below major support levels. After the August close, NIFTY wasted little time and produced strong bearish signals on the weekly and smaller timeframes during the first week of September.
Overall, the index remains bearish until reversed.
Now let’s turn to the annual frame shown below. As we highlighted earlier this year, NIFTY formed 10 consecutive green annual candles, which points to trend exhaustion under Japanese Candlestick theory. The 2025 candle then formed an Inside combo by a narrow margin, adding another important warning that the long-term odds may be shifting.
There is now an elevated probability that the annual price could return toward the mean, and I highlighted that area on the chart using several different techniques. Those skeptical of this signal may want to compare it with the UNH annual chart we called in 2023, which now clearly shows how that setup developed by 2026.
NIFTY’s annual candle is not confirmed yet, so the final outcome remains open. However, this is an important development to watch closely, with the December 31 close likely to carry significant long-term implications.
But we may get an important directional signal much earlier—at the end of September.
If we look at the quarterly MACD and candlestick chart, the current setup is very similar to the one NIFTY formed in 2020. If the September quarter closes with a green candle and solid technical support, the chances of a continued rally will increase, although confirmation would still be needed.
A red Q3 candle, however, would significantly strengthen the bearish case and would likely point to a continued decline, potentially toward the 50 QMA level marked by the dashed line on the chart.
So this is another important marker to watch closely.
Now let’s turn to the Elliott Wave structure.
ELLIOTT WAVES
The most important developments since our previous discussion in March are now becoming clearer. NIFTY failed to develop a larger-degree impulsive decline and instead most likely completed only the first leg of a broader correction, marked as wave A in blue. The rebound since April has been clearly corrective, which keeps the odds tilted toward at least one more lower low below the April bottom.
For now, the blue ABC remains the primary count. This structure could complete an entire wave (2), but it could also represent wave 4 in green. Both scenarios point to additional downside before the larger structure is resolved.
The blue rectangle marks the minimum pullback area I would expect under the current setup, roughly 11–13% below today’s level. However, a more typical wave (2) correction would extend into the red rectangle, which represents a substantially deeper retracement.
That deeper scenario would come into play if NIFTY moves below the October 2021 high. Such a break would invalidate the green count and significantly strengthen the case for a larger wave (2) correction.
SUMMARY
NIFTY’s technical picture has deteriorated meaningfully since our March discussion. The failed attempt to negate the 4M Bearish Engulfing, the August monthly Dark Cloud Cover, and the weakness developing on the shorter frames all point to elevated downside risk. The Elliott Wave structure supports the same message: the rebound from the April low appears corrective, and the blue ABC remains the primary path, with at least one more lower low currently favored. Depending on how the decline develops, the correction could initially reach the 11–13% area, with a substantially deeper wave (2) scenario still possible.
The quarterly and annual frames will be especially important. A constructive Q3 close could improve the bullish odds, while a bearish September close would reinforce the case for further downside. The annual structure is also showing signs of exhaustion after ten consecutive green candles, raising the possibility of a longer-term return toward the mean. The December 31 close remains a major marker, although the market may provide a much clearer directional signal well before then.
There is also a broader macro factor worth keeping in mind. India remains highly dependent on imported energy, particularly crude oil, so a sustained rise in oil prices could eventually create additional pressure through inflation, the currency, corporate margins, and the broader economy. This does not determine NIFTY’s path by itself, but it could become an important reinforcing factor if the technical bearish scenario develops. For that reason, readers may want to review our latest Oil Monthly and Weekly reports, where we discuss the long-term oil roadmap and the possibility of materially higher energy prices.
