Market Overview: Nifty 50 Futures
Nifty 50 Bear Channel on the weekly chart. This week, the market closed strongly in a bullish move. However, it is still trading within a bear channel and is currently near the bottom of the channel. On the daily chart, Nifty 50 broke out of a tight bear channel, but the bulls failed to provide strong follow-through after the breakout.
Nifty 50 futures
The Weekly Nifty 50 chart
- General Discussion
- Traders in short positions should continue holding, as the market remains in a strong bear channel. Bulls have failed to form strong consecutive bull bars in recent sessions.
- Traders in long positions can exit near the top of the bear channel or set a stop-loss order at the low of the current bar.
- Traders who are not in any position can consider shorting near the top of the bear channel if a strong bear close occurs or wait for a bull breakout with solid follow-through before entering long positions.
- Deeper into Price Action
- Over the last 10 to 15 bars, the market has been forming bars with tails on both sides, and strong closes—whether bullish or bearish—have not been followed by confirmation bars.
- In other words, a strong bull close is often followed by a bear bar and vice versa, indicating a trading range price action.
- Patterns
- The market is currently trading in a strong bear channel. If the bears manage to achieve a strong breakout with a good follow-through bar, there is a high probability that the market will reach a measured move down based on the height of the bear channel.
The Daily Nifty 50 chart
- General Discussion
- Traders who entered a long position on the bull breakout of the bear channel can continue holding, as the market has shown follow-through.
- Traders in short positions can also continue holding. However, if the market gives a strong bull close, they should consider exiting, as this would increase the chances of the bull breakout succeeding.
- Deeper into Price Action
- The market was trading in a tight bear channel, making a V-shaped reversal less likely. Instead, traders can expect a small second leg down before a potential reversal.
- According to market cycle theory, breakouts typically transition into tight channels, which then evolve into broader channels. Eventually, the market shifts into a trading range before another breakout occurs, and this cycle repeats over time.
- Patterns
- The market has given a bull breakout of the tight bear channel. Since a successful bull breakout from a tight bear channel is less likely compared to a broader channel, traders usually prefer to enter a long position after a pullback rather than immediately on the breakout.
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