Markets vs Reality — A bounce on the cards in the face of uncertainty?

Global markets have shown surprising resilience over the past week - in the face of a continuing war that gets fiercer by the day. Does the market know something that we don't or this is just a short lived bounce, destined to taper off in the time to come. Only time can tell.

Let's look at the charts to understand the technical picture.

Nifty - Nifty has been flirting with the massive weekend gap of 2025 when the market closed at ~22900 on Friday, April 4 and opened at ~ 21760 on Monday, April 7, a gap of ~ 1150 points. Interestingly, this price gap coincides with a congestion in Nifty from February till May of 2025, a 4 month period before the election results were announced.

This zone (congestion in 2024 and weekend gap in 2025) has offered support to Nifty in the last week to form a bullish engulfing at double bottom on the daily and a hammer on the weekly chart.

Nifty Weekly chart showing a hammer last week in a support zone

Nifty daily chart showing a Bullish Engulfing at double bottom support

DJIA - Has formed a reverse H&S shoulder with last Thursday's candle forming a bullish Outside Strong Green on the daily chart. The pattern looks all set to break out on the upside. The weekly candle has formed a Bullish Engulfing pattern negating the bearish candle from the prior week (aka sell failure). The entire setup has formed at strong support at 45050.

Daily chart of DJIA showing an Outside Green Candle that is part of a reverse H&S pattern

Weekly chart of DJIA showing a Bullish Engulfing pattern at strong support

S&P - a remarkable Bullish Engulfing pattern formed last week on the weekly chart after breaking down from a strongly bearish broadening pattern the prior week, forming a sell failure setup that has bullish implications.

Weekly chart of S&P showing a Bullish Engulfing pattern, a failure of breakdown from a broadening pattern in the prior week

The European indices formed large green candles the last week after a breach of strong support in the prior weeks, signaling a remarkable reversal.

The global markets, as indicated above, signal a strong reversal on the cards. This is despite the uncertainty created by the war that has shown no signs to end soon. Does the market know more than we do?

Only time can tell.

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