Bullish Candlestick Pattern Points to Nifty Breakout

Spread love

Nifty closed above its 50 DEMA after repeated resistance, with Angel One seeing potential upside towards 24,600. Sensex and Bank Nifty also showed bullish breakout signals amid strong global cues.

By S. JHA

Mumbai, May 7, 2026 — Indian equity markets staged a strong recovery in the second half of trade on Wednesday, with benchmark indices ending sharply higher as technical indicators pointed to improving momentum and the possibility of a breakout rally.

According to a market note by Angel One, the Nifty has finally managed to close above its 50-day exponential moving average (50 DEMA) after facing resistance at that level twice over the past week. Analysts said the formation of a “higher bottom” pattern suggests strengthening momentum, with the index now appearing poised to move towards the 24,600 mark.

The Nifty ended the session up 1.24% at 24,330 after a volatile day in which prices drifted lower during the first half before strong buying support emerged later in the session.

Angel One noted that the Nifty had spent the past week trading in a narrow range between the 20 EMA and 50 EMA, forming a series of small-bodied candlesticks that reflected consolidation and lack of clear directional momentum. However, Wednesday’s formation of a strong bullish candlestick following that consolidation phase could indicate a potential breakout.

The Sensex also reflected a similar trend. While the index initially slipped from higher levels on Monday and remained under pressure in early trade, sustained buying at lower levels helped the benchmark recover sharply.

“Over the past three sessions, the index has been closing around the 70,000 mark, indicating consolidation and a wait for a momentum trigger,” the brokerage said.

Technical analysts highlighted the formation of a long lower shadow along with a bullish candle on the Sensex chart, suggesting accumulation at lower levels and a possible breakout from the recent consolidation range.

Bank Nifty, meanwhile, showed mixed signals during the session. The banking index opened weak and traded below the lows of the previous two sessions for much of the day before witnessing buying support in the latter half. Although it initially formed another small-bodied candlestick reflecting lack of strong conviction, the index later outperformed with strong gains.

Angel One said the Bank Nifty eventually formed a bullish engulfing candlestick that covered the previous three sessions’ narrow trading range, indicating stronger buying momentum returning to banking stocks.

Among sectoral indices, Nifty Pharma continued to outperform, extending gains for the third consecutive session with a rise of 2.3%. Analysts attributed the rally to a breakout from a two-year-long consolidation phase, suggesting the sector could continue to see strong momentum.

Global cues also remained supportive. Broad-based buying was witnessed across major global markets, with European indices trading higher by more than 2%, helping improve investor sentiment in domestic equities.

Market participants will now watch whether the Nifty can sustain above key moving averages and build momentum towards the 24,600 resistance zone in the coming sessions.

(Disclaimer: This article is only for informational purposes, and no trades are recommended.)