Market Overview: Nifty 50 Futures
Nifty 50 wedge top on monthly chart where Nifty 50 produced a series of bull closes, but the bull bar has a small body. Market is getting close to the big round number and the all-time high level, which will act as powerful price resistance. The market is trading inside a tight bull channel, and the Nifty 50 produced a bearish close on the weekly chart.
Nifty 50 futures
The Monthly Nifty 50 chart
- General Discussion
- More bears would be drawn in as the market approached the peak of the wedge top formation and the all-time high level, both of which serve as price resistance.
- The market is close to the wedge top, thus bulls should refrain from purchasing at this price.
- Bulls who are in long position should not exit their positions until market reaches the all-time high or forms a strong bear bar.
- Bears should hold off on selling until the price has reached the closest resistance and the market has formed a strong bear bar.
- Deeper into the price action
- Observe the last 20 bars on the monthly chart. You’ll see that the majority of them overlap and have small bodies and tails on either side.
- Because these characteristics of trading range price behaviour are present, a trading range is likely to arise.
- A trading range would result if bulls are unable to successfully break out of the 19000 level.
- A wedge can be thought of as a channel, thus a trading range would be the next potential phase according to the market cycle theory.
- Since 19000 is a big, round number and would act as a magnet, this could result in a sharp bull leg in that direction in shorter time frames.
The Weekly Nifty 50 chart
- General Discussion
- Market is trading inside a tight bull channel and thus bears should wait for a strong bear close before they sell.
- Bulls should refrain from taking a swing position at this level as the market is getting close to an all-time high.
- Because there is a pending measured move target, bulls who are long should only exit their position when the market develops strong bear bars, or close to the measured move target.
- Deeper into price action
- In the last 10 to 15 bars, bulls were able to give strong successive bull closes while bears were unable to create a strong bear bar.
- Bulls gave a strong breakout of the bar-1 high, leading to an open breakout gap, despite the fact that Bar-1 was a solid bear bar.
- Bears attempted to close the breakout gap on bar-3 but were unable.
- Bears made another attempt to close the breakout gap on bar-4 but were unsuccessful. The strong bull bar that followed suggested a potential measuring gap.
- Because the market is now trading within a narrow bull channel, bulls shouldn’t take a swing position and bears shouldn’t sell until the market produces a significant bear bar.
- The market created a measuring gap, which gave the bulls who are already long a potential target to target a measured move.
- Because the market is currently trading close to its all-time high, traders should be prepared for some trading range price action in the upcoming weeks.
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