Market Overview: Nifty 50 Futures
Nifty 50 Micro Double Bottom on the weekly chart. The market on the weekly chart closed with a weak bearish candle, showing a tail at the bottom. This week’s candle is forming a micro double bottom pattern with the previous swing low. Overall, the market remains in a strong bullish trend on the weekly chart, and the strong bearish bar has been followed by a weak follow-through bar. On the daily chart, Nifty 50 is forming a head and shoulders pattern along with a wedge bottom. The market is now trading near the significant round number of 25,000, so traders can expect increased price action within a wider trading range in the upcoming week.
Nifty 50 futures
The Weekly Nifty 50 chart
- General Discussion
- Traders who have not yet entered this strong bull trend can wait for a high-1 or high-2 setup. Since the market has not shown a strong follow-through, traders should focus on taking or scaling into long positions.
- It is advisable for traders to avoid shorting at the moment, as the market has not produced another strong bearish bar. A short position could be considered if the bears manage to form a strong low-1 setup or if there is a failure in the high-2 setup.
- Traders who are already holding long positions should continue to hold until the market produces strong consecutive bearish bars.
- Deeper into Price Action
- The market is currently in a strong bull trend. For this trend to reverse, the bears would need to establish consecutive strong bearish bars, which they have so far been unable to do.
- It’s also important to observe that while the bears occasionally manage to produce a strong bearish bar, the follow-through has been weak, indicating that bulls are buying at bearish closes.
- Patterns
- The market is trading within a bullish channel and has shown a bearish bar. For this bearish breakout to succeed, the bears will need to follow it with strong continuation.
- If the bears do succeed in generating a good follow-through, there is a higher probability that the market will drop toward the lower end of the bullish channel (around 22,800).
The Daily Nifty 50 chart
- General Discussion
- The market has been showing an increasing trading range price action for the past two weeks. Traders should wait for a clear breakout from a pattern before making major moves.
- Since the market has formed a V-shaped pattern, if it starts showing consecutive bullish bars, traders should consider buying with the assumption that this could be the bottom of the trading range.
- Traders who have taken short positions should wait for a strong bearish breakout of the head and shoulders pattern. However, they should exit their positions if the market forms a strong bullish bar.
- Deeper into Price Action
- Unlike before, the chart now shows both a strong bullish leg and a strong bearish leg, indicating that traders should treat the market like a trading range. This implies that instead of aiming for long swing positions, traders should focus on quick exits—buying low and selling high.
- The market is now trading near the significant round number of 25,000. Whenever the market trades near such a key level, there is often an increase in trading range price action.
- Patterns
- The market is forming a head and shoulders pattern, and a strong bearish breakout could lead to a large measured move downward, based on the height of the head and shoulders pattern.
- Additionally, the market is currently trading within a wedge bottom, and a breakout from this wedge could result in the formation of a broader trading range.
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