After ending lower for three consecutive sessions, the Nifty 50 managed to bounce back on Thursday, gaining support from buying interest during the closing auction session (CAS). The index closed 46.30 points higher at 23,477.80. However, the recovery lacked strength for most of the session, as the index remained volatile and failed to hold higher levels before witnessing a late surge towards the close.
On the daily chart, the index formed a green candle with a long lower shadow, suggesting that buyers stepped in at lower levels. Despite this recovery, the index continues to maintain a pattern of lower highs and lower lows on the daily timeframe, indicating that the short-term trend remains under pressure.
From a technical standpoint, the overall structure remains unchanged. However, the formation of a hammer-like candle after a sharp decline, coupled with the index moving into oversold territory, indicates a possibility of a short-term rebound.
A hammer pattern after a sustained fall is often considered an early sign of a potential reversal. However, the pattern requires confirmation through subsequent price movement before indicating a meaningful trend reversal.
For the recovery to gain momentum, the Nifty needs to sustain above the immediate hurdle of 23,495. The next resistance zone lies between 23,572 and 23,623, which marks the downside gap formed on September 9.