Strong Buy signal on Nifty and Banknifty supported by US indices - what lies ahead?

Nifty and Banknifty have triggered strong buy signals last Friday on their respective daily charts, even in the face of crude crossing USD 100 and INR nearing 96 levels against the USD.

Nifty formed a piercing pattern right at a big gap support near the bottom created on the12th of June. A similar pattern occurred on 24th of July that started a big 6 day rally to an intermediate high. However, the latter was also a strong sell failure which is not the case this time.

Banknifty, on the other hand, has all the ingredients of a strongly bullish piercing pattern. It has formed at strong gap support from 12th of June, is a sell failure and has closed very strong, engulfing 2 prior candles. Multiple confluences that make it a very strong signal.

The US indices have also triggered a buy on their daily charts after a sustained downtrend. Consider the daily charts of DJIA and S&P Futures, both of which have formed a Big Green Bullish Engulfing after a sell signal, hence a sell failure.

The European markets have price action more or less similar to the US

The strong buy was generated on a Friday in the face of negative geopolitical realities - record high Treasury yields, sticky inflation reading from Friday's CPI and the rising crude prices. The market moving bullishly to bearish news is generally a strong event as it feeds on public disbelief.

The concerted price action across global markets does suggest that a bottom may be in place, even if temporary. Let time tell.

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