This Nifty 50 indicator shows bullish turnaround after India-Pakistan hostilities subsided

Despite the uncertainty following rapid escalation followed by a quick ceasefire, the technicals suggest that there is potential for a bullish turnaround.

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The measure of volatility, India Vix, has sharply cooled off at open on May 12, even as Nifty 50 soared more than 2.5 percent in early trade as hostilities on the western borders subsided after the DGMOs of India and Pakistan spoke over the weekend to agree on truce, following a rapid escalation in tensions.

The prevailing sentiment among traders and investors may remain that of caution for the near-term, even as the longer term potential remains intact. After a gap up start, what does the Nifty50 chart tell us about the market trajectory?

Here is the Nifty 50 Weekly Heikin Ashi chart, for some perspective.

The Heikin Ashi charts provide a clearer view of price action by smoothing out volatility. Unlike traditional candlestick charts, they use a modified formula that averages price data to create less noisy candles.

The 100-week exponential moving average (100WEMA) channel is constructed using two components – the 100-WEMA high and low, and acts as a strong reference point for potential support and resistance levels.

Over the past 18 years, the Nifty 50 index has only dropped more than 10 percent twice – once in 2008 during the global financial crisis, and again in 2020 during the COVID-19 crash. At every other instance, the 100-WEMA channel has reliably served as a support zone, meaning it’s been an area where prices tend to bounce back.

Focusing on the current chart, we can see that the Nifty 50 experienced a sharp fall in April 2025.

The current decline took support right at the 100-WEMA channel and reversed strongly, reinforcing the idea of the zone being a critical support.

Despite the uncertainty following rapid escalation followed by a quick ceasefire, the technicals suggest that there is potential for a bullish turnaround. The support zone is firmly established at the breakout level of 23,800, with the 100-WEMA channel providing additional backing between 22,599 and 21,867.

What is interesting is the bullish Heikin Ashi candles that have appeared over the last four weeks. These candles indicate a potential reversal after the recent decline, pointing to the possibility of a significant bullish rally ahead.

Based on the data, it seems that the Nifty 50 is well-positioned to hold key support levels and could potentially lead the market into a recovery phase.

Note: The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. This article is strictly for educational purposes only.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.