Equity benchmark Nifty 50 ended at 22,520 on Friday, 9 October, snapping its eight-week losing streak. The index climbed by nearly half a per cent, even as rising oil prices, elevated bond yields, and foreign capital outflow kept sentiment sombre.
According to Jigar S. Patel, Senior Manager of Equity Technical Research at Anand Rathi Share and Stock Brokers, the index is trying to establish a durable base, while the price-RSI combination indicates a potential bullish divergence.
Patel highlighted that the Nifty’s monthly chart is displaying important technical signals near a crucial long-term support zone.
“The index has formed two major lows around 22,180, while the monthly Relative Strength Index (RSI) has registered a higher reading. This price-RSI combination indicates a potential bullish divergence, suggesting that underlying selling momentum may be weakening,” Patel told Mint.
Moreover, a three-point bullish divergence is visible on the daily chart, further strengthening the possibility of a recovery.
Patel pointed out that a similar three-point bullish divergence was observed in April 2026, following which the Nifty rallied by 2,245 (10% up move) points from its low of 22,182.
“The alignment of historical RSI support, a long-term trendline and the 50-month Simple Moving Average (SMA) adds significance to the current technical setup,” Patel said.
Double-bottom formation and RSI divergence
Patel underscored that Nifty made a low of 22,182.55 in April 2026 and subsequently touched 22,179.90 in the first week of October 2026. These near-identical price levels indicate a potential double-bottom formation or an extended bottoming structure.
However, Patel added that a confirmation would require sustained price stability and a decisive move above the intervening resistance zone.
The monthly RSI is displaying a bullish divergence. While the index has revisited almost the same price level, the RSI reading has improved from 43.67 in March 2026 to 44.37 in the current month. This suggests that bearish momentum may be weakening despite the repeated test of support, said Patel.
Adding to the positive technical picture, a three-point bullish divergence is also visible on the daily chart. This indicates a potential improvement in momentum across both daily and monthly timeframes. The alignment of these signals strengthens the case for a possible recovery, although price confirmation remains essential, Patel pointed out.
Historical RSI support and trendline confluence
According to Patel, the monthly RSI is currently trading within the 40–45 zone, which has historically provided support during several corrective phases, except during exceptional market declines such as those witnessed in 2008 and 2020.
“Since 2021, the RSI has broadly respected the 40–80 range, indicating that the broader bullish momentum structure may remain intact,” said Patel.
The Nifty is trading above its 50-month SMA, currently placed at 22,325.94, while the rising long-term trendline provides further technical context to the current price structure.
As per Patel, the proximity of these long-term indicators to the recent lows increases the significance of the prevailing support zone.
Ky technical factors to watch
Patel emphasised keeping a close eye on these key technical factors:
Major price support: Nifty is trading near the crucial 22,180 level, where the April and October 2026 lows indicate a potential double-bottom formation.
Monthly RSI support: The RSI is holding within the historical 40–45 support zone, which has provided a cushion during several corrective phases.
Monthly bullish divergence: The RSI has improved from 43.67 to 44.37 despite the index revisiting similar price levels, indicating potentially weakening bearish momentum.
Daily three-point bullish divergence: The three-point bullish divergence on the daily chart provides an additional positive momentum signal.
Long-term technical support: The Nifty is trading above its 50-month SMA at 22,325.94, while the rising trendline adds further significance to the broader support structure.
“These factors suggest that the Nifty may be attempting to establish a durable base. However, sustained buying and confirmation through price action remain essential to validate a potential recovery. A decisive breakdown below the broader support structure could invalidate the bullish hypothesis and expose the index to further downside,” Patel told Mint.
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Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of the expert, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
