Last week, global financial markets experienced significant turbulence driven by economic data that heightened fears of a U.S. recession. The downward trend that began the previous Thursday extended into Monday, with the DOW and Nasdaq opening sharply lower.
This volatility persisted until Wednesday, especially for the DOW, which then saw a remarkable recovery on Thursday, forming a "Gap and Go" candle on its daily chart. Friday’s session was marked by consolidation at the week’s highs, resulting in a hammer pattern on the DOW’s weekly chart and a strong piercing pattern on the Nasdaq’s weekly chart—both suggesting a bullish outlook for the upcoming week
Lets look at the weekly charts below.
DJIA Weekly Chart - A strong Hammer at support
Nasdaq Weekly Chart - A strong Piercing Pattern
Last week, the Indian markets too experienced significant volatility, largely driven by global factors. Over just two trading sessions on August 2nd and 5th, the market plunged by 1,100 points, creating a challenging environment for positional traders.
The week was marked by frequent and sharp gap ups and gap downs, with price action swinging wildly within a 400-point range between 24,000 and 24,400. This volatility triggered stop losses on both sides of trades, making it difficult for traders to find stability.
Despite the turbulence, the weekly candles for the Nifty, Bank Nifty, and IT indices formed hammers, signaling potential bullish momentum in the early part of the upcoming week. Lets look at the charts below.
Nifty Weekly Chart - A strong Hammer
Banknifty Weekly Chart - A strong Hammer at support
Nifty IT Weekly Chart - A strong Hammer at support
Though the weekly charts of the indices look bullish in the short term, however, they face significant overhead resistance, particularly from the substantial gap down on the previous Monday, where Nifty dropped 400 points from 24,700 to 24,300.
The key question remains: Will the markets have the strength to overcome this resistance? The coming days will provide the answer.
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