Market Overview: Nifty 50 Futures
Nifty 50 High-1 signal bar’s high has been breached this week. The market this week closed with a strong bullish momentum. The bull bar closed near its high with only a short tail at the bottom. Bears once again failed to produce a bear bar, reducing the likelihood of a reversal. Since the bear breakout from the tight bull channel hasn’t gained follow-through, there’s a high probability that the market will transition into a broader bull channel. On the daily chart, Nifty 50 is currently trading within two patterns: a larger bull flag, and within that bull flag, a smaller bull channel.
Nifty 50 futures
The Weekly Nifty 50 chart
- General Discussion
- The market is still trading in a strong bull trend. So far, the bears have failed to show any significant strength to reverse this trend.
- Traders holding long positions should continue to do so, at least for a second leg up. They should consider exiting their positions only if the bears manage to form strong consecutive bear bars.
- Bulls who haven’t yet entered this bull trend can consider entering at current levels. However, be aware that as the market is trading near the significant round number of 25,000, it may exhibit trading range price action in the upcoming weeks.
- Deeper into Price Action
- The market was trading in a tight bull channel and has now given a bear breakout from this channel. Typically, when a market gives a bear breakout from a bull channel, it transitions into a broader and less steep bull channel.
- As the market is near the key round number of 25,000, traders should maintain wider stops. This is crucial because when the market trades around such a significant number, it tends to exhibit trading range price action, which could prematurely exit a good trade if the stop is too tight.
- Patterns
- The significant round number of 25,000 will act as a major resistance for the price. Additionally, the chances of an overshoot of the tight bull channel are very low.
- Traders should anticipate trading range price action for the coming weeks as long as the market remains near the 25,000 level.
The Daily Nifty 50 chart
- General Discussion
- On the daily chart, the market has been exhibiting trading range price action over the past few weeks. Traders can expect this behavior to continue in the upcoming weeks.
- Currently, the market is trading near the middle of the trading range. Traders should wait for the market to reach either end of the range before considering a new position.
- Given the trading range, both bulls and bears have opportunities to make profits in the current market conditions.
- Deeper into Price Action
- This week, the bears managed to achieve strong bear closes, but they were unable to sustain a significant follow-through downward.
- Similarly, last week, the bulls formed strong bull bars but could not secure a solid follow-through upward.
- When the market is in this state, where strong bull or bear bars fail to generate follow-through, it is likely that the market has already entered a trading range.
- When you observe this pattern, it is a signal to adjust your strategy to “buy low and sell high” rather than holding positions for swings.
- Patterns
- The market is currently trading within a bull flag. If the bulls can break out of this flag, traders can anticipate a measured move upward based on the flag’s height.
- Conversely, if the bears manage to break down from the small bull channel, traders should expect a measured move downward based on the height of the trading range or the bull channel.
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