Market Overview: Nifty 50 Futures
Nifty 50 Wedge Overshoot on the monthly chart. The market on the monthly chart (May month bar) gave a doji close. Bulls were able to follow through well after the wedge overshoot and are still continuing that bull leg. The weekly chart shows a very big outside bar that covered the price range of the past few months. Usually, a high volatility phase like this is followed by trading range price action. The outside bar gave a bear breakout of the bull channel but re-entered the channel.
Nifty 50 futures
The Monthly Nifty 50 chart
- General Discussion
- Bulls who are holding long positions should continue holding their positions as the market is trading in a strong bull trend and hasn’t shown a strong reversal attempt yet.
- Bears can consider shorting the market for a reversal since the market has formed doji bars, especially if it follows with strong consecutive bear bars.
- For those bulls who haven’t entered the market yet, entering at current levels is feasible. The market is in a strong bull trend, reducing the chances of a reversal to less than 60%. Maintaining a risk to reward ratio of 1:1 would result in a positive trader’s equation.
- Deeper into the Price Action
- After overshooting the wedge, the market is now forming doji bars, indicating an increasing trading range in price action. This increases the possibility of a pullback.
- Follow-through bars after the wedge overshoot indicate higher chances of a measured move up based on the height of the wedge top.
- If the June monthly bar closes with a doji, chances of a trading range will likely increase.
- In recent months, bulls have consistently closed with strong bull closes, while bears have failed to produce even a single strong bear close.
- Patterns
- The market experienced a bull breakout of the wedge top. Generally, the success rate of such breakouts is around 25%.
- With the bulls exhibiting good follow-through bars, there’s a high probability that the market will move up to the measured move target based on the height of the wedge top.
The Weekly Nifty 50 chart
- General Discussion
- Bulls who are holding a long position should continue to hold their position as the big surprise bar has a long tail at the bottom.
- If the bears can form a strong bear bar closing near its low, then bears can take a short position as it increases the chances of a small trading range.
- Deeper into Price Action
- Usually, after a big surprise bar (like the one in the chart above), the market forms some sort of trading range.
- If in the next bar, bulls are able to get a strong bull bar closing near high, then the trend will resume, causing a measured move up based on the height of the bull channel.
- If the bears are able to form a strong bear bar closing near low, then chances of a trading range will increase.
- Patterns
- Nifty 50 was trading inside a bull channel. The market formed a big surprise bar, which gave a bear breakout of the channel but again entered into the channel.
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