The ‘Piercing Line’ is a bullish reversal pattern formed at the lows and signals reversals of short-term bottom. Analysts said Nifty might have formed a bottom at Friday’s low of 14,350.
Analysts said Friday’s recovery came from the confluence of support levels, as the index almost retraced 62 per cent of its last leg of rally from the low of 13,596 to 15,431 level at the intraday low of 14,350.
“Friday’s low was inside the bullish gap zone registered on February 2. If Nifty consistently trades above 14,475 level, then the probability of bottoming out at Friday’s low of 14,350 will remain high. A confirmation in this regard can be expected only on a close above the 15,051 level,” said Mazhar Mohammad of Chartviewindia.in.
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That said, despite the recovery, sideways price action of last six weeks appears to have paved the way for a ‘sell’ signal on the weekly MACD chart.
“Thus, the sustainability of this rally shall remain somewhat uncertain,” Mohammad said.
For the day, Nifty closed at 14,744, up 186 points or 1.28 per cent.
Nagaraj Shetti of HDFC Securities said the index has respected the lower supports of the previous opening upside gap of February 2 and also the weekly 10-period
“The weekly 10 period EMA has offered crucial support to the index since past few months and resulted in a sustainable bounce,” he said.
Meanwhile, the index has broken out of the falling channel on the hourly chart. “The overall structure shows the index is recovering from lower end of the consolidation range and can head towards the upper end. Going ahead, the 14,800 level will be the immediate hurdle, beyond which Nifty can move towards the 15,000 mark,” said Gaurav Ratnaparkhi of Sharekhan.