Nifty had formed a bearish engulfing candlestick pattern on October 15. From the high of 12,025, we saw Nifty plunging towards 11,661 on that day.

However, the next two sessions were bullish with Nifty retracing more than 61.8 percent of the entire fall of 364 points registered on October 15.

The bearish implication of the engulfing candle gets negated once we see a recovery of more than 61.8 percent of the entire fall.

In the current scenario, Nifty has done the same and negated the probable downtrend.

The index has managed to hold its level above 20, 50, 100 and 200-day moving averages, which indicates that the positional uptrend is intact and supports are not violated yet.

The DMI indicator has also been moving bullish, as +DI has been maintaining its position above –DI, with rising ADX on the daily charts.

The important development which gives the confidence that the market would move up is the technical setup of Bank Nifty, which has closed at the highest level since August 28, 2020.

Bank Nifty has broken out from the flag pattern on the daily chart, which indicates the fresh buying momentum in the banking stocks.

The next resistance for Bank Nifty is seen at 25,232 which is almost 1,000 points away from the current levels.