Market Overview: Nifty 50 Futures
Nifty 50 Inside Bar on the weekly chart. The market on the weekly chart has closed bullish this week. This is the first time, after a strong bear reversal attempt, that the bulls have managed to produce consecutive bullish bars. The market is currently trading within a bull channel and is near the middle of this channel. The number of bars with tails is increasing, indicating a high probability that the market will soon enter a trading range. On the daily chart, Nifty 50 formed a strong bullish bar on Friday. However, the bulls have not yet been able to achieve strong follow-through after the bullish breakout from the head and shoulders pattern.
Nifty 50 futures
The Weekly Nifty 50 chart
- General Discussion
- Traders who are holding a long position should continue holding, as the bulls have managed to generate a strong pullback. This increases the likelihood of a trading range forming rather than a reversal.
- Traders holding a short position should consider exiting if the market approaches the swing low again. Experienced traders may scale into their short positions and then exit at the 50% pullback level.
- Traders who are not yet in a position should wait for the market to reach the top of the bull channel to take a short position or wait for the market to reach the bottom of the channel to enter a long position.
- Deeper into Price Action
- The market has formed a V-shaped move: a strong bullish leg followed by a sharp decline, and then another recent V-shaped move. V-shaped moves are a typical characteristic of a trading range, so traders can expect a trading range to develop on the weekly chart.
- Despite a very strong bear reversal attempt, the bulls have not been able to achieve strong consecutive bullish bars. This further reduces the likelihood of a reversal occurring.
- Patterns
- The market is currently trading in a strong bull channel. The probability of a successful bullish breakout from a bull channel is only 25%.
- If the market breaks out to the upside from the bull channel but then starts trading back inside the channel, there is a very high probability that the market will eventually touch the bottom trendline of the bull channel.
The Daily Nifty 50 chart
- General Discussion
- Last week, the market experienced a bullish breakout of the head and shoulders pattern but lacked strong follow-through. However, on Friday this week, the market was able to produce a very strong bullish bar.
- Traders holding long positions should continue to hold their positions, anticipating the market will reach the measured move target.
- Traders who shorted the market, betting on the failure of the head and shoulders breakout, should exit their short positions. The bulls have formed a very strong bullish bar, increasing the chances of the market moving higher.
- Deeper into Price Action
- Over the last 7-8 bars, the market has been trading within a narrow range, forming a small trading range. This suggests that traders should expect a breakout soon.
- In recent bars, the bears have failed to produce a strong bearish close with follow-through, which increases the probability of the bullish breakout being successful.
- Patterns
- The market has formed a micro double bottom. If the bulls succeed in a breakout, traders can expect the market to move up by an amount roughly equal to the height of the micro double bottom.
Market analysis reports archive
You can access all weekend reports on the Market Analysis page.
