Market Overview: Nifty 50 Futures
Nifty 50 Bull Channel on the weekly chart. The market closed strongly bullish this week, breaking a seven-week bearish streak. It is currently trading near the bottom of a large bull channel while also moving within a smaller bear channel. On the daily chart, Nifty 50 is forming a wedge bottom near the measured move target of a head and shoulders pattern. Throughout the week, the market showed bearish closes, except on Friday, which saw a very strong bullish close.
Nifty 50 futures
The Weekly Nifty 50 chart
- General Discussion
- The market has experienced a significant and strong pullback within this bull trend. However, since the market is currently trading near the bottom of the bull channel, traders should avoid selling at current levels.
- Traders are advised to wait for a weak bull pullback before considering selling. Selling after a strong bear close will allow traders to set a smaller stop-loss, improving their risk-to-reward ratio.
- Should traders buy? Unlike earlier bear attempts to reverse this bull trend, the bears this time have made a stronger reversal attempt.
- Rather than immediately buying on the next strong bull close and assuming the trend will resume, I would prefer to wait for the market to form a robust bull leg first. Then, I would consider going long on the second leg up.
- Deeper into Price Action
- The bears have delivered a much stronger reversal attempt this time compared to previous attempts. Looking at the bull channel in the chart, notice that in earlier instances when bears tried to reverse the trend, they failed to produce strong consecutive bear bars.
- However, this time, the bears have succeeded in forming strong consecutive bear bars, indicating increased bearish pressure. Additionally, this time, each strong bear bar was followed by another bear bar, unlike in earlier reversal attempts where this pattern was absent.
- Patterns
- The market is trading within a broad bull channel, offering opportunities for both buyers and sellers. Traders can achieve a favorable trade equation by selling near the high of the channel and buying near its low
The Daily Nifty 50 chart
- General Discussion
- The market has made a strong bullish breakout from the wedge bottom and has approached the measured move target of the head and shoulders pattern, leading to some profit booking.
- Although the daily chart shows a strong bearish trend, traders should avoid opening new short positions, as the market has broken out of the wedge bottom with bullish momentum.
- Deeper into Price Action
- After a strong bearish trend, the bulls managed to form a very strong bullish bar, referred to as a surprise bar. Such bars often result in a second bullish leg, which traders can use to take a scalp trade.
- However, if the bulls fail to generate a strong follow-through bar and instead the bears create a strong bearish bar, traders should consider the bearish trend to have resumed. In this case, they should sell following a strong bearish bar to enter the trend.
- Patterns
- If the bullish breakout from the wedge bottom is followed by a strong continuation bar, there is a high probability that the market will form a small trading range, with a range size equivalent to the height of the wedge pattern
Market analysis reports archive
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