Market Overview: Nifty 50 Futures
Nifty 50 Measuring Gap Measured Move on the monthly chart. This month, the market showed a strong bullish close and surpassed the significant milestone of 25,000. The measured move target, considering both the measuring gap and the wedge overshoot, has yet to be reached. Therefore, traders should anticipate at least a second leg up before any potential reversal. On the weekly chart, the market presented a small bearish bar closing near its low, but it is still trading within a tight bullish channel. As the market is now around the 25,000 level, traders can expect a range-bound price action in the upcoming weeks.
Nifty 50 futures
The Monthly Nifty 50 chart
- General Discussion
- The market on the monthly chart is trading in a strong bull trend. For the past ten months, bears have failed to form a strong bear bar. Therefore, bears should hold off from selling until the market forms consecutive bear bars.
- Traders who are already in a long position can continue holding their longs. The nearest achievable target is the measuring gap’s measured move target.
- Traders who have not yet entered a long position can buy on the close or switch to a lower time frame chart (such as a weekly chart) and enter on high-1.
- Deeper into Price Action
- The market has failed to produce a strong bear bar for several months. Even if bears manage to create a strong bear bar now, the chances of a reversal remain low.
- Generally, after a strong bull leg (or bull trend), the first reversal attempt has a very low chance of success and often fails, leading to a second leg up.
- If bears succeed in creating a strong bear bar in the upcoming month, bulls can scale into their position as the chances of a second leg up are much higher compared to a reversal.
- Patterns
- The market has overshot the wedge pattern and broken out of a swing high without filling the breakout gap. Both of these factors indicate a measured move up.
The Weekly Nifty 50 chart
- General Discussion
- The market is trading in a strong bull trend and is currently inside a tight bull channel. Bears have failed to create strong consecutive bear bars for several weeks. Bears should not sell until the market forms strong consecutive bear bars.
- Bulls who have not entered the trend can wait for the market to give a pullback and then enter on a high-1 signal bar.
- Bulls who are already in a long position can continue holding their positions until the market forms strong consecutive bear bars in its second reversal attempt.
- Deeper into Price Action
- The market is now trading near the big round number of 25,000, so traders should expect some range-bound price action on the weekly chart.
- Many bulls who bought around 23,000/24,000 may start exiting their positions, which could result in a small pullback.
- If bears can achieve a strong bear breakout with good follow-through of the tight bull channel, the chances are high that the market will transition into a range-bound phase that could last several weeks.
- Patterns
- The market is now trading near the 25,000 level, which will act as strong resistance for the price. Additionally, a bull breakout above 25,000 will also be an overshoot of the tight bull channel.
- Usually, the chances of a bull breakout of a bull channel being successful are around 25%, while a bear breakout has a 75% chance of success.
- However, as the market is trading in a very strong bull trend, I wouldn’t give much weight to these probabilities. The 25-75 rule applies better when the market is trading in a relatively sideways manner.
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