Will Nifty's smart recovery sustain? What a Bullish Engulfing pattern suggesting

From a day's low of 21,530.20, Nifty on Wednesday witnessed a smart recovery, which resulted in a large bullish candle on the daily chart that engulfed real bodies of the last few sessions, thus, forming a Bullish Engulfing pattern. The index, though, continued to make lower lows for the fifth straight session. Anlaysts said the NSE barometer needs to hold above the support of 21,750 for upside towards 21,850-22,000 levels.  Some consolidation with a positive bias is likely, they said.
 
"The bulls had complete control but intraday swings were wild. Nifty formed a Bullish Engulfing candle on the daily scale but has been forming lower-low for the last five sessions due to absence of follow up. Now it has to hold above 21,750, for an upside move towards 21,950 and 22,100 level whereas supports are placed at 21,700 and 21,550 levels," said Chandan Taparia of Motilal Oswal Securities.

The 50-pack index eventually settled the session at 21,840.05, up 96.80 points or 0.45 per cent.

"Nifty has made a high of 21,870, which is the higher end of the falling channel, and if a decisive breach above the upper band of the range barrier of the 21,870 zone is triggered, a breakout would be confirmed and with improvement in the bias. One can expect for the next target to retest the previous peak levels of 22,000–22,150 levels. The near-term support would be maintained near 21,750–21,770 levels,' Prabhudas Lilladher said in a note.

Jatin Gedia – Technical Research Analyst at Sharekhan said that the index held on to the support zone of 21,550–21,530 on the daily chart and witnessed a sustained buying interest throughout the day. On the hourly charts, Gedia said the 50-pack index has reached the upper end of the falling channel that can lead to some consolidation with a positive bias. 

"On the upside, the immediate hurdle is placed at 22,000–22,020 where the daily upper Bollinger band is placed whereas now the support shifts upwards towards 21,650–21,670," he said.

A decisive breakthrough above 21,850 might trigger a rally towards 22,200, said Rupak De, Senior Technical Analyst, LKP Securities. 

"On the downside, a short-term support level is identified at 21,500. A significant decline below 21500 could potentially initiate a correction towards 21,270/21,000," he said.

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