NIFTY: Double Bottom Sign of Reversal?

Domestic markets have responded positively to union budget 2016 and today NIFTY witnessed a rally of 235 which is largest intraday gain in last 1 year. A double bottom pattern has emerged on price chart and technical indicators are showing bullish divergence at the same time which is supportive for bulls. However, MACD indicator has been staying in bearish territory but a cross above its signal line hints weakening bearish momentum and divergence on this indicator hints strengthening bulls. 14 periods daily RSI has also formed a bullish divergence which is also supportive for bulls. On price action front NIFTY is now approaching towards descending trend line resistance and horizontal line which has flipped to resistance near 7260 zones. In case of stability above 7260 it will confirm a double bottom and descending trend line break and then a primary rally towards 7520-7600 zones can’t be ruled out. Support will remain at 7030 failure of this level seems less likely in case of failure next key support can be expected at 6820 and below that resumption to on going down trend can’t be ruled out. Currently market has bullish tone and bulls are safe as long as this index stays above 7030 zones.

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Nifty Options Weekly Expiry; MAX PAIN stands at 13400

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