Market Overview: Nifty 50 Futures
Nifty 50 Trading Range Price Action on weekly chart. On the weekly chart, the market has shown a small, weak bull bar with a long tail at the top, indicating it remains in a phase of trading range rather than trending. Last week’s micro double bottom formation remains intact, potentially leading to an upward move if there’s a bull breakout. Currently, the market is still within the bull channel, suggesting that traders may consider buying at the low points and selling at the high points. Looking at Nifty 50 on a daily basis, it’s not yet within a big triangle pattern, which is a breakout mode pattern. Since the triangle hasn’t fully converged yet, traders might opt to sell near the upper trendline and buy at the low. Additionally, the market has formed an inside-outside-inside bar, indicating a trading range scenario.
Nifty 50 futures
The Weekly Nifty 50 chart
- General Discussion
- The market is currently trading near the middle of a reasonably tight bull channel, making it challenging for sellers to profit.
- Until a strong bear breakout of the micro double bottom/bull channel occurs, it’s advisable for bears to hold off from selling.
- Since the market is still within a bull trend, bulls can consider buying at current levels. Last week, despite attempts by bears to form a strong bear bar, they failed to close convincingly, resulting in a long tail at the bottom. Additionally, this week, bears again failed to produce a bear bar, which is a bullish indication. (Two ways to enter the current trend are discussed below.)
- Deeper into Price Action
- Approach-1 (for aggressive traders):
- Bulls are struggling to produce strong bull closes, and the market exhibits significant trading range price action. Consequently, some bulls might opt to wait.
- These bulls may wait for a bear breakout of the bull channel before buying once the market reaches the bottom of the bull channel.
- While this strategy may enable them to buy stocks at a lower rate, it comes with the risk of buying at a higher price if bulls manage to produce a strong bull close in the next bar, causing the price to continue upward.
- Approach-2 (for conservative traders):
- Considering the aforementioned factors, conservative traders might choose to buy a partial amount of shares at the current level and await a decisive market move, such as a significant bull or bear bar.
- This approach allows for a lower average buy price, even if the market forms a substantial bull bar, resulting in buying at a higher price.
- Although this strategy involves less risk than the aggressive approach, it also yields lower profits on the trade.
- Approach-1 (for aggressive traders):
- Patterns
- A quick summary of all the patterns forming on the chart includes a tight bull channel, a micro double bottom, and the current market trading around the significant psychological level of 22,000.
The Daily Nifty 50 chart
- General Discussion
- The market is trading near the top of the triangle, and it is also forming a strong bear bar. Bears can sell here and exit near the bottom.
- Bulls should avoid buying at this point; instead, they should wait for the market to approach the bottom of the triangle before considering buying.
- Deeper into Price Action
- On the daily chart, the market continues to form patterns such as inside-outside-inside bars, inside bars, and outside bars. These patterns are clear indicators of trading range price action.
- During trading range phases, traders should have a clear exit plan because volatility is high during these times, leaving less time to decide whether to exit a trade.
- Patterns
- The market is currently trading within a breakout mode pattern, indicating a 50% chance of a successful breakout in either direction.
- When there’s a gap between both trendlines of the triangle, traders can execute trades. However, they should cease trading and await a breakout if the gap narrows to the point where profitable trading becomes challenging.
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