07 August 2025 : Nifty 50 Shows Falling Wedge and RSI Divergence – Is a Bounce Coming?

The Nifty 50 index has shown a sharp corrective phase over the past few sessions, falling from the 25,600+ zone to test key support levels near 24,400. A detailed technical chart reveals multiple critical patterns such as a Diamond Top, Head & Shoulders breakdown, and a Falling Wedge accompanied by RSI bullish divergence. This sets up the potential for a short-term bounce, but with caution. Let’s explore the setup for August 7, 2025.

 Key Technical Patterns

• Diamond Top near 25,600 signaled reversal and initiated selling.
• Head & Shoulders breakdown confirmed with neckline violation.
• Falling Wedge structure forms as price approaches support.
• RSI Divergence: RSI making higher lows while price makes lower lows.

 Support & Resistance Levels

 Option Strategy for August 7, 2025

• Sell 24,200 PE @ ₹46
• Sell 24,800 CE @ ₹74
• Net Premium Collected: ₹120
• Breakeven Range: 24,114 – 24,886

This neutral strategy benefits if Nifty stays within the wedge structure and consolidates near 24,400–24,800. You can add protection at 200 points of each leg. 

 Suggested Trade Table

Trader Psychology & Moving Averages

Many traders are trapped above 25,000. The emotional stress may result in panic exits or defensive short-covering, especially near 24,400. Moving averages (20 EMA and 50 EMA) are both sloping downward, reflecting short-term weakness. However, a bullish crossover may emerge if RSI divergence plays out.

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📌 Conclusion

The Nifty 50 is approaching a critical juncture near 24,400. Technical formations hint at a potential bounce, but broader trend weakness remains. A well-planned option strategy can help navigate this volatility. Stay alert for RSI signals and confirmation of wedge breakout.