The Nifty saw a significant movement on Friday, July 26, 2024, marking a notable trading day. This development was anticipated based on the events leading up to it, starting with the budget day on Tuesday. On this day, the market experienced a sharp decline followed by a rapid recovery, resulting in a prominent pin shaped hammer candlestick pattern.
On Wednesday, Nifty opened lower and continued to decline for most of the day, only to recover strongly by the afternoon, forming an inside day pattern. This two-day sequence of late-day bullish action, rejecting the lows, indicated a potential upward trend.
However, the scenario was complicated by a 500-point drop in the Dow Jones on Wednesday, which influenced Nifty to open sharply lower on Thursday. Despite this, the bearish trend was short-lived, and Nifty rallied for the remainder of the day after forming a hammer on the first hourly candle. This marked the third consecutive day of low rejection, reinforcing the bullish sentiment.
By Friday, the conditions were ripe for a significant bullish move. Nifty opened near the previous day's close and surged immediately, forming our Bullish Setup 5 - a strong green candle on C1 (hourly candle ending at 10 AM IST) . This candle represented a breakout above a small rounding bottom pattern formed over the past two days and a break above the horizontal resistance at 24,540.
The rest of the day saw a robust rally, with Nifty gaining 460 points and surpassing all price targets. This was one of the strongest trading days since the substantial recovery following the election results.
Lets look at the chart which has annotations that are self explanatory.
(Fig 1.1 - Big Green on C1 on Nifty Futures)
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