Hi, yesterday we closed at 7029.75 on Nifty Spot creating a bearish engulfing pattern on the weekly charts. Now as we all know that Bearish Engulfing is a bearish candlestick pattern but my question is – At channel bottoms is it a bullish indication? Well to look at past history I identified two such occasions on Nifty Weekly Charts between the bear markets of 2010-2012. Here is the attached image
As you can see at the top of the channels, it works great to identify the near term top whereas at the channel bottoms it does an equally good job to make as think that more downside is possible while Nifty reverses as a short term bottom. Have a look at this weeks chart
Will be interesting to see whether we form a short term bottom out here as all the technical indicators are over extended and relief rally or a fresh bull run might be the case with the budget being announced this Monday.