Market Overview: Nifty 50 Futures
Nifty 50 Bull Channel Overshoot on the weekly chart. The market this week closed slightly bullish, with a small tail at the top. It is moving towards the bull channel overshoot measured move target and has formed a small breakout gap, which could lead to a measuring gap measured move based on the height of the previous leg. The Nifty 50 daily chart is close to the measured move target of the inside bar pattern, and the market is currently trading within a strong, tight bull channel.
Nifty 50 futures
The Weekly Nifty 50 chart
- General Discussion
- The market is moving towards the measured move target and is currently in a strong bull leg, so bears should hold off from selling.
- Bulls who are already in a long position can hold their positions until the market reaches the measured move target.
- Traders who want to enter this bull trend can buy at the current level (this approach involves a big stop loss), or they can wait for a pullback and then enter (the downside of this approach is that you might miss the trend if a pullback doesn’t occur).
- Deeper into Price Action
- The small bear bar (bar-3) can be considered a small pullback, so its high will be the swing high. The bulls were able to break out above this swing high (bar-3 high).
- Additionally, from the high of bar-1 to the low of bar-3, bears were unable to bring the price down in that region, forming a breakout gap.
- A bull breakout gap usually leads to a measured move up based on the height of the bull leg.
- Patterns
- Bulls were able to achieve a successful bull breakout of the bull channel, which led to the measured move up.
- The market is forming a breakout gap, which could lead to a measured move up.
The Daily Nifty 50 chart
- General Discussion
- The market on the daily chart is trading in a tight bull channel, so bears should not be selling until the market forms a strong bear leg.
- Bulls who are already in a long position should not exit as soon as the market reaches the measured move target.
- Bulls should only exit their positions if bears are able to form strong consecutive bear bars.
- Deeper into Price Action
- Since the bull leg is strong, there is about a 60% chance that it will form a second leg up before a reversal occurs, so bulls can enter on a high-1.
- Note that I am calculating the measured move of the inside bar based on its body rather than the height of the candle (the usual way).
- I have calculated the measured move this way because when you have a very big target, the probability of reaching it decreases.
- First, you should target the smaller move as it is of higher probability (in our case, calculated based on the body). Once the initial target is reached, you can aim for the second target (in our case, the measured move based on the range of the candle).
- Patterns
- The market is trading in a tight bull channel. If the bears are able to break out of this channel, traders should expect the market to transition into a bull channel.
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