Market Overview: Nifty 50 Futures
Nifty 50 Bull Channel on the weekly chart. This week, the weekly chart shows a strong bearish close, marking the fourth consecutive bearish bar. The market has now reached the lower boundary of the bull channel in which it has been trading. Additionally, a bearish breakout from the micro double bottom has occurred, suggesting the market may move toward the measured target. On the daily chart, the Nifty 50 index is trading in a tight bear channel and has broken out below a head and shoulders pattern.
Nifty 50 futures
The Weekly Nifty 50 chart
- General Discussion
- Traders who bought near the high of this bull channel should rely on their stop-loss or exit at the low of the nearest swing low.
- Given that the market has produced a strong bearish breakout from the micro double bottom, bears can either take a scalp by selling at the low of the latest bear bar or wait for a low-1 setup before selling.
- Deeper into the Price Action
- This marks the fourth consecutive bear bar following a strong bull trend. Typically, the chances of a V-shaped reversal are low, suggesting that the likelihood of a pullback is high before a reversal occurs.
- By assessing the strength of this pullback, we can determine whether the market will transition into a bear trend, resume the bull trend, or shift into a trading range.
- Scenario 1: If the market exhibits a very weak pullback characterized by weak bullish bars, there is a high probability that it will transition from a strong bull trend to a bear trend.
- Scenario 2: Conversely, if the market experiences a pullback accompanied by strong bullish bars, there is a significant chance that it will either revert to a trading range or resume the bull trend.
- Patterns
- The market has been trading within a bull channel for the past year, but now bears are attempting a strong reversal
The Daily Nifty 50 chart
- General Discussion
- Traders who shorted the bearish breakout from the head and shoulders pattern can maintain their short positions until the market either reaches the measured move target or forms strong consecutive bullish bars.
- Bulls are advised to refrain from buying at this point, as the market is trading within a strong, tight bear channel following a bearish breakout.
- Traders who missed the chance to short during the breakout can still enter on a strong bearish close, with a stop loss placed at the nearest swing high.
- Deeper into Price Action
- The market was previously in a strong bull trend, but now bears have executed a bearish breakout of a major pattern, marked by strong bearish bars.
- Following the bearish breakout, bulls managed to produce only one strong bullish close, which did not lead to any subsequent follow-through.
- Patterns
- The market has broken out of the reversal pattern (head and shoulders) and is now trading within a tight bear channel
Market analysis reports archive
You can access all weekend reports on the Market Analysis page.