Technical Analysis for 4th Jul 2025
Today's Market Movement (3rd July): A Day of Indecision Sets the Stage
Following the previous day's aggressive sell-off, the Indian Stock Market entered a state of consolidation on July 3rd. The Nifty 50 traded within a narrow range of approximately 200 points, ultimately closing at 25,405.30, a marginal loss from its previous close. This price action resulted in the formation of an "Inside Bar" on the daily chart, a candlestick pattern that signifies indecision and a temporary truce between bulls and bears.
The market's inability to stage a meaningful recovery, despite a quiet session, suggests that the bearish sentiment from the prior day's "Bearish Engulfing" candle still looms large. The trading volume was notably lower across both Nifty and Bank Nifty, indicating a lack of conviction from either side. While the bulls managed to defend the crucial support levels, the bears successfully capped the upside, leading to a classic range-bound session. This period of calm is often the precursor to a significant directional move, making the next trading session critically important for determining the market's future trajectory.
Nifty Trading Levels & Strategy for 4th 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 3rd): 25,405.30
- Today's Range: 25,384.35 to 25,587.50
- 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
- Inside Bar Formation: Today's entire trading range (high and low) was contained within the range of the previous day's large bearish candle. This pattern highlights a contraction in volatility and a state of equilibrium. A breakout or breakdown from this inside bar's range will likely trigger the next leg of the trend.
- Declining Volume: The drop in trading volume (Nifty volume at 29.33 Cr vs. 30.97 Cr yesterday) during a consolidation phase is significant. It suggests that neither buyers nor sellers were willing to commit aggressively, reinforcing the theme of indecision.
- Bank Nifty's Continued Weakness: Bank Nifty continued to underperform, closing in the red at 56,791.95. Its struggle to reclaim the 57,000 mark is a persistent drag on the overall market sentiment. Financials are a heavyweight sector, and their weakness often signals broader market fragility.
- Defense of Key Support: Despite the bearish undertone, the bulls successfully defended the support zone around 25,380. This level now becomes a critical line in the sand for the market.
Global Cues & Macro Factors
The global environment is leaning slightly negative, which could add to the domestic pressure.
- Crude Oil: Brent crude has risen to $67.29 per barrel. A continuous rise in oil prices is a headwind for the Indian economy, as it can fuel inflation and increase import bills.
- USD/INR: The Rupee has strengthened slightly to 85.32 against the dollar. A stronger rupee is generally positive, but its impact may be muted by other negative factors.
- European & US Markets: European markets are trading flat to bearish, and Dow Futures are pointing towards a similarly weak start for the US markets. This lack of global support means the Indian market will have to rely on its own internal strength, which currently appears fragile.
Tomorrow’s Market Prediction (4th July 2025)
The stock market prediction for tomorrow hinges on the resolution of the Inside Bar pattern. In technical analysis, an Inside Bar after a strong directional move (like Wednesday's Bearish Engulfing) often acts as a continuation signal. Therefore, the probability favors a breakdown.
The market is coiled for a move. The key levels to watch are today's high (25,587.50) and low (25,384.35).
- Primary Bearish View: A decisive break below 25,378 will confirm the continuation of the downtrend. This would trigger the bearish scenario, with initial targets at 25,308 and 25,220. The narrow range of today's session could lead to a sharp and fast move once the breakdown occurs.
- Alternate Bullish View: For the bulls to regain control, they need to push the market above today's high of 25,587.50 and, more importantly, achieve a sustained close above the resistance zone of 25,503. If this happens, it would negate the immediate bearish pressure and could trigger short-covering towards 25,602 and 25,734.
Final Verdict
The market is at a critical juncture. While today's session was range-bound, the underlying technical structure remains weak. The combination of a preceding Bearish Engulfing candle, an Inside Bar, declining volume, and unsupportive global cues suggests a higher probability of a downward resolution. The risk-to-reward ratio currently favors the bears. A "sell on rise" strategy remains the prudent approach until the market gives a clear signal of a bullish reversal by closing decisively above the key resistance zones. Expect volatility to pick up as the market breaks out of today's narrow range.
Disclaimer: This analysis is for educational purposes only and should not be construed as a buy or sell recommendation. Trading in stocks and the derivative market involves substantial risk. Please consult your financial advisor before making any trading or investment decisions.