Market Overview: Nifty 50 Futures
Nifty 50 Outside-Outside Bar on the monthly chart. The market closed slightly bullish this month, but overall remained sideways. Currently, it is trading within a triangle pattern and has also shown a bullish breakout of the outside-outside bar pattern, indicating the potential for a measured move upward if there is a successful follow-through. On the weekly chart, Nifty 50 is trading inside a bullish channel. This week, the market closed bearish with a small-bodied candle and is now trading near the major round number of 25,000.
Nifty 50 futures
The Monthly Nifty 50 chart
- General Discussion
- Traders who are in a long position or have entered a long position due to the bullish breakout of the outside-outside bar may continue holding their position until the measured move is reached or the market starts forming strong consecutive bear bars. In that case, the chances of a trading range will increase.
- Traders who are not holding any positions can place a stop order at the high of the current bar to enter a long position.
- If the market next gives a strong bearish close, the odds of a triangle pattern or a trading range will increase. In that case, bears will have an opportunity for short scalping trades.
- Deeper into the price action
- If a strong bear leg is not followed by a strong bull leg, this is a classic sign of a trading range. Traders should expect a trading range in the upcoming months.
- Until the market gives a strong breakout with follow-through on either side, traders should assume that the market is in a trading range.
- Since the market is showing many signs of a trading range, traders should adjust their strategies and adapt to the current phase of the market cycle.
- Patterns
- What is a market cycle? Market cycle theory states that the market usually follows a cycle with different phases such as the breakout phase, followed by a channel phase (tight or broad), and finally transitions into a trading range.
- Keep in mind that a trading range might not always form a perfect rectangle. However, this doesn’t prevent you from identifying the trading range phase, as we’ve already discussed the classic signs of a trading range.
The Weekly Nifty 50 chart
- General Discussion
- Traders in a long position may consider exiting, as the market is trading near the top of the bull channel and forming patterns like an inside bar and a doji bar, which are signs of trading range price action.
- Traders who are not in any position should wait, as shorting might not be a good choice while the market is still trading inside a strong bull channel.
- Deeper into Price Action
- The market is currently trading near the big round number 25,000. Generally, when the market is near a big round number or another important level, two things tend to happen.
- First, these levels act like a magnet for price. Second, the market often begins to show trading range price action because the price frequently reverses after moving in either direction around these levels.
- Patterns
- The market is trading inside a strong bull channel, which makes it harder for bears to make money.
- In such channels, bears should avoid taking short positions. Bulls may continue to hold their long positions even if the market reaches the top of the bull channel.
- However, bulls should consider exiting at current levels due to the presence of the big round number 25,000, which increases the likelihood of a trading range.
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