Market Overview: Nifty 50 Futures
Nifty 50 Bull Micro Channel on the weekly chart. This week, the market formed a bull bar with a small body and short wicks on either side. The market is currently trading inside a 3-bar bull micro channel, with the nearest target being the measured move of the bull channel overshoot. This measured move is calculated based on the height of the bull channel. On the daily chart, Nifty 50 is trading inside a tight bull channel and is currently near the bottom of this channel. The market has already reached the first target (based on the body of the bar) of the inside bar pattern.
Nifty 50 futures
The Weekly Nifty 50 chart
- General Discussion
- The market is trading in a strong bull trend and has not yet reached the measured move target of the bull channel overshoot. Therefore, bulls can buy on high-1 or high-2 signals.
- Bears have failed to form strong consecutive bear bars in the past several bars, and the market is currently forming consecutive bull bars, so bears should hold off from selling.
- Bears can start selling once the market forms strong consecutive bear bars, particularly before reaching the measured move target.
- Deeper into Price Action
- By looking at the current price action, most bulls who are holding long positions will decide to hold their positions until the market reaches the measured move target.
- However, if the market starts forming strong consecutive bear bars before it gets near the measured move target, this will create panic among the bulls.
- Once bulls start seeing strong consecutive bear bars, most will start exiting their long positions and not hope for the market to reach the measured move target.
- This will further strengthen the bears and lead to more consecutive bear bars. Therefore, once you see consecutive bear bars before the market reaches the measured move target, it will be a good point to book profits on your long positions.
- Patterns
- The market has given a measured move target due to the overshoot of the channel. The measured move target is based on the height of the channel.
- The market is also forming a bull micro channel. A bull micro channel is characterized by a specific pattern. It occurs when the low of the preceding bar is lower than the low of the subsequent bar.
The Daily Nifty 50 chart
- General Discussion
- The market has reached the first measured move target of the big inside bar pattern, but it is apparent from the price action that not many bulls are interested in booking profits here.
- The market is still trading inside a tight bull channel. Unlike a broad bull channel, in a tight bull channel, it is very difficult for bears to make money by selling near the top.
- Bears should avoid selling even near the top of this channel, as structuring a profitable short trade in a tight bull channel is very hard. Instead, bears should wait for a strong bear breakout of this channel.
- Deeper into Price Action
- In the tight bull channel, notice that the bears have failed to form a strong bear bar. Almost all the bear bars have either a long tail at the bottom or a small body.
- This indicates that the chances of a reversal are very low unless the bears form strong consecutive bear bars after a bear breakout of the tight bull channel.
- Patterns
- Note that I am calculating the measured move of the inside bar based on its body rather than the height of the candle (the usual way).
- I have calculated the measured move this way because when you have a very big target, the probability of reaching it decreases.
- First, you should target the smaller move as it is of higher probability (in our case, calculated based on the body). Once the initial target is reached, you can aim for the second target (in our case, the measured move based on the range of the candle).
- Now that it has reached the first target, you can aim for the next level, which is the measured move based on the height of the inside bar.
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