Technical Analysis 3rd July 2025
Today's Market Movement (2nd July): A Bearish Engulfing Confirms Weakness, Market Analysis for 3rd July
The Indian Stock Market succumbed to significant selling pressure today, validating the cautious stance from our previous analysis. The Nifty 50 index opened near 25,588, attempted a brief upward move, but failed to sustain higher levels. The selling intensified throughout the day, pushing the index to a low of 25,378 before closing at 25,453.40. This price action formed a textbook Bearish Engulfing candle on the daily chart, a powerful technical signal that suggests sellers have taken firm control from the bulls. The increased trading volume on Nifty (30.97 Cr shares vs. 26.06 Cr yesterday) during this down-move adds further weight to the bearish sentiment.
Bank Nifty was even weaker, opening at 57,628 but plummeting to close below the psychological 57,000 mark at 56,999.2.
Our previous analysis highlighted the potential for a false breakout, and the market performed exactly as anticipated. The levels provided worked dot-to-dot, with the market failing to hold above the bullish trigger points, leading directly to our specified downside targets. This reinforces the current market structure of "sell on every rise."
Nifty Trading Levels & Strategy for 3rd July 2025
Here is a breakdown of the key levels and potential trading scenarios for the Nifty index for the upcoming session. This plan is based on a 15-minute candle closing basis for confirmation.
Key Principle: Avoid taking bullish trades when the prevailing candle structure is bearish, and avoid bearish trades when the structure is bullish.
- Today's Close (July 2nd): 25,453.40
- Today's Range: 25,378.75 to 25,608.10
- Crucial No-Trading Zone: 25,378 to 25,503
Scenario 1: Bullish Breakout
- Trigger: If a 15-minute candle closes decisively above 25,503.
- Upside Targets:
- 1st Target: 25,602
- 2nd Target: 25,734
- 3rd Target: 25,838
Scenario 2: Bearish Breakdown
- Trigger: If a 15-minute candle closes decisively below 25,378.
- Downside Targets:
- 1st Target: 25,308
- 2nd Target: 25,220
- 3rd Target: 25,116
Scenario 3: False Breakout (Bull Trap)
- Trigger: If a 15-minute candle moves above 25,503 but fails to close above it, instead closing back within or below the zone.
- Short-Side Targets:
- 1st Target: 25,400 (or today's closing level)
- 2nd Target: 25,308
Scenario 4: False Breakdown (Bear Trap)
- Trigger: If a 15-minute candle moves below 25,378 but fails to close below it, instead closing back within or above the zone.
- Upside Targets:
- 1st Target: 25,470
- 2nd Target: 25,600
Key Observations at Market Closing
- Bearish Engulfing on Nifty: This is the most critical observation. This pattern occurs when a large bearish candle completely engulfs the body of the previous day's bullish candle. It signifies a decisive shift in momentum from buyers to sellers and often precedes further downside.
- Volume Confirmation: The rise in Nifty's volume on a day of significant price decline indicates strong participation in the selling activity, confirming the validity of the bearish trend.
- Bank Nifty Underperformance: Bank Nifty's sharp fall and close below 57,000 is a major concern, as it is a key driver of the overall market. Its weakness could continue to drag the Nifty down.
- Closing Near Day's Low: Both indices closing near their intraday lows suggests that there was no significant buying interest at lower levels, and sellers remained in control until the very end of the session.
Global Cues & Macro Factors
The global backdrop presents a mixed picture, which could lead to some initial volatility.
- Crude Oil: Brent crude is trading around $66.05 per barrel, a slight uptick. Higher crude prices can be inflationary and are generally a mild negative for the Indian economy.
- USD/INR: The Rupee is holding steady near 85.69 against the dollar. A stable currency is a neutral factor for the market.
- European & US Markets: European markets are trading flat to bullish, and Dow Futures are indicating a similar flat-to-positive opening for the US market. This positive global sentiment is in direct contrast to our domestic technical setup.
Tomorrow’s Market Prediction (3rd July 2025)
The stock market prediction for tomorrow is heavily influenced by the powerful Bearish Engulfing pattern. While positive global cues might trigger a flat or slightly positive opening, such a gap-up would likely be met with fresh selling pressure. The high of the engulfing candle (today's high of 25,608) now acts as a formidable resistance.
The path of least resistance is downwards. The primary trend for the session is bearish, and traders should be cautious about taking aggressive long positions. The market will likely attempt to test and break today's low of 25,378.
- Bearish View: If the market breaks below 25,378, we can expect a swift move towards the support levels of 25,308 and 25,220. The ultimate target in this leg of the fall would be 25,116.
- Bullish View (Low Probability): A sustainable move on the upside can only be considered if the market manages to close above the high of the engulfing candle at 25,608. Until then, any upward movement should be treated as a temporary pullback.
Trade Recommendations
Given the bearish technical setup, the recommended approach is to sell on rallies.
- For Bears: Look for opportunities to initiate short positions if the Nifty bounces towards the resistance zone of 25,500-25,550 and shows signs of rejection. A confirmed break below 25,378 would be another trigger for fresh shorts, with the targets mentioned above. A Bear Call Spread strategy (selling a Call option at a higher strike and buying another at an even higher strike) could be used to benefit from a range-bound or downward move.
- For Bulls: Extreme caution is advised. Do not initiate any long trades until Nifty shows a decisive and sustained close above 25,608. A premature entry could lead to a bull trap.
Final Verdict
The technical evidence overwhelmingly points towards a bearish continuation for the Indian Stock Market. The Bearish Engulfing pattern, coupled with high-volume selling, has tilted the scales firmly in favor of the sellers. While global cues might offer brief support, the domestic sentiment is weak. The prudent strategy for tomorrow is to be patient, respect the established resistance levels, and look for selling opportunities on any signs of strength. The market is expected to remain under pressure until the high of 25,608 is convincingly taken out.
Disclaimer: The views and analysis expressed here are for educational purposes only and should not be considered as direct investment or trading advice. Trading in the stock and derivative market involves a high degree of risk. The author and Option Matrix India are not responsible for any financial losses. Please consult your financial advisor before making any investment decisions.