Equity benchmark Nifty 50 ended at 22,520 on Friday, 9 October, snapping its eight-week losing streak. The index climbed by nearly half a per cent, even as rising oil prices, elevated bond yields, and foreign capital outflow kept sentiment sombre.
According to Jigar S. Patel, Senior Manager of Equity Technical Research at Anand Rathi Share and Stock Brokers, the index is trying to establish a durable base, while the price-RSI combination indicates a potential bullish divergence.
Patel highlighted that the Nifty’s monthly chart is displaying important technical signals near a crucial long-term support zone.
"The index has formed two major lows around 22,180, while the monthly Relative Strength Index (RSI) has registered a higher reading. This price-RSI combination indicates a potential bullish divergence, suggesting that underlying selling momentum may be weakening," Patel told Mint.
Moreover, a three-point bullish divergence is visible on the daily chart, further strengthening the possibility of a recovery.