Market Overview: Nifty 50 Futures
Nifty 50 Tight Bull Channel on the monthly chart. Nifty 50 is currently in a tight bull channel on the monthly chart. This month, the market showed a strong bearish close for the first time in a year. Despite the prevailing strong bull trend, bears will need consistent follow-through bars to make a convincing reversal attempt. The market is trading near the lower end of this bull channel. On the weekly chart, Nifty 50 has formed a weak bearish bar with a small body. Following the bull trap, bears managed to form consecutive bearish bars, increasing the likelihood of a measured move down to the 23,000 level.
Nifty 50 futures
The Monthly Nifty 50 chart
- General Discussion
- Traders who are holding long positions should continue to hold as the market remains in a strong bull trend. They should avoid exiting their long positions until bears manage to produce another strong consecutive bearish bar.
- Since the market is trading within a tight bull channel, traders can consider entering long positions using limit orders placed at the lows of the previous bullish bars.
- Bears should refrain from taking short positions until they can demonstrate a solid reversal attempt.
- Deeper into Price Action
- After the market reached the wedge overshoot measured move, many bulls decided to book their profits on their long positions, as indicated by the formation of a bearish bar.
- For a reversal to occur, bears need to demonstrate their willingness to sell. However, up to this point, it has primarily been bulls who sold to secure their profits. A strong follow-through bearish bar will confirm that bears are also interested in shorting.
- Patterns
- If bears succeed in achieving a strong bearish breakout from the tight bull channel, the likelihood increases that the market will begin to exhibit trading range price action.
- Once the market starts displaying trading range price action, traders will need to adjust their strategies to focus on buying low and selling high.
The Weekly Nifty 50 chart
- General Discussion
- Bulls who entered at the highest price should consider exiting at the low of the inside bar, as there is a high likelihood that the market may decline to the bull trap measured move.
- Bears may opt for a quick scalp by entering a short position at the low of the inside bar, aiming for a measured move down based on the height of the inside bar pattern.
- Deeper into Price Action
- Bears managed to create five consecutive bearish bars after a strong bull trend. Given the strength of the previous bull trend, a complete reversal is unlikely; instead, the market will probably shift into a trading range.
- Patterns
- Following the bull trap, the market is forming a bearish inside bar, which is likely to lead to a measured move down, based on the combined height of both patterns.
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