Market Overview: Nifty 50 Futures
Nifty 50 Bull Channel on the weekly chart. This week, the market formed a strong bull bar that closed near its high, following a strong bear bar. This indicates an increasing trading range price action. On the weekly chart, the market is trading inside a weak bull channel, characterized by bull bars with small bodies and tails on either side. The Nifty 50, on the daily chart, is trading within a large trading range. Traders should adopt a buy-low, sell-high strategy.
Nifty 50 futures
The Weekly Nifty 50 chart
- General Discussion
- Bulls who are holding long positions should continue to do so as the bears have yet to make a strong attempt at reversing the trend.
- Bears should refrain from selling at this level since the market is still firmly in a bullish trend. Selling may become viable once the market demonstrates a robust bearish breakout from the bull channel.
- Deeper into the Price Action
- It’s notable that even amidst the bull channel, both strong bull and bear bars struggle to generate significant follow-through.
- An increase in the frequency of poor follow-through bars typically signals the likelihood of a trading range or reversal.
- In the current scenario, given the market’s robust bull trend, the probability of a reversal is low. Instead, the most viable scenario for bears would be a trading range.
- Patterns
- The market is currently confined within a weak bull channel. Typically, there’s a 25% chance of a successful bull breakout and a 75% chance of a successful bear breakout in such conditions.
- The expanding trading range within the channel further elevates the likelihood of a trading range scenario.
The Daily Nifty 50 chart
- General Discussion
- Market is currently trading within a significant trading range. Thus, it’s advisable for traders to adhere to a «buy low, sell high» trading strategy.
- Presently, the market is positioned near the upper half of this trading range. Consequently, it’s prudent for bulls to refrain from buying at this juncture. Conversely, bears should prepare for selling when the market approaches the upper boundary of the trading range.
- Deeper into Price Action
- Following the bear breakout of the bull channel, the market transitioned into a substantial trading range. A trading range is characterized by a breakout mode pattern, meaning there’s an equal likelihood of a successful breakout on either side, approximately 50-50.
- Patterns
- When the market shifts from a trending phase to a trading range phase, traders need to adjust their trading approach accordingly.
- For instance, instead of holding trades for extended periods, traders should be prepared to exit positions if the price begins to reverse before reaching the upper limit of the trading range.
- Additionally, it’s essential to recognize that markets within a trading range tend to exhibit increased volatility. Therefore, traders should set relatively wider stop-loss orders to accommodate volatile price movements.
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