Market Overview: Nifty 50 Futures
Nifty 50 Bear Channel on the weekly chart. The bulls attempted to break out of the wedge but failed to secure a strong close. Now, the bears are trying to achieve a successful bear breakout. The market is trading within a bear channel. On the daily chart, Nifty 50 is moving inside a trading range after a false bull breakout from the bear channel.
Nifty 50 futures
The Weekly Nifty 50 chart
- General Discussion
- Traders in a short position should continue holding their position since the bulls failed to achieve a bull breakout.
- Traders holding a long position should maintain their longs until the bears manage to secure a strong bear breakout of the wedge, followed by a confirming bear bar.
- As the market is still in a bull trend, traders who have not yet entered a position can consider going long if the bear breakout of the wedge fails or if the bulls achieve a strong bull breakout.
- Deeper into Price Action
- If the bulls succeed in breaking out, the likelihood of a trading range forming, equivalent to the height of this bear channel, increases.
- Patterns
- The market is forming a micro double bottom, which is a double bottom pattern that develops over 3-4 bars.
- Generally, the probability of a successful bear breakout from the bear channel is only around 25%.
The Daily Nifty 50 chart
- General Discussion
- Traders who are in a long position following the bull breakout of the bear channel can hold their position with a tight stop-loss, as the market is currently trading within a range.
- Traders looking to enter a position can go long once the market shows a strong close and target the high of the trading range.
- Deeper into Price Action
- When the market reverses after a bull breakout from a bear channel, the chances of a trading range forming are very high. This occurs because it creates a V-shaped pattern, which is a characteristic of trading range price action.
- Previously, the market was in a bear trend, but now it is moving within a trading range. Traders should adjust their exit strategies accordingly—rather than holding for long swings, they should aim to exit their trades quickly near the high and low of the range.
- Patterns
- If the bears succeed in breaking out of the trading range, there are two potential downside targets. The first target is a measured move down based on the height of the trading range, and the second target is a measured move down based on the height of the bear channel.
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