Market Overview: Nifty 50 Futures
Nifty 50 Wedge Measured Move on the weekly chart. The market closed bearish this week with a small-bodied candle, providing weak follow-through to the previous strong bullish bar. Bulls were unable to push the price higher towards the top of the channel. Additionally, the market has broken below the wedge pattern, suggesting a potential downward move based on the wedge’s height. On the daily chart, the Nifty 50 continues to trade within a broad bearish channel.
Nifty 50 futures
The Weekly Nifty 50 chart
- General Discussion
- Traders who are in a short position should continue holding, as the market has broken below the wedge.
- Traders holding a long position may consider exiting on the next open or placing a stop-loss at the low of the current bar or the nearest swing low, given the confirmed bear breakout with strong follow-through.
- Deeper into Price Action
- After the bear breakout, bulls attempted to reverse the move but failed due to a lack of follow-through. This increases the probability of the market reaching the measured move down.
- The breakout gap created by the bear breakout of the wedge remains open, indicating a high likelihood of the market moving further down based on the breakout gap.
- Patterns
- The market has been trading within a bearish channel and is currently at the lower boundary of the channel.
- Bears have successfully broken below the wedge with strong follow-through, reinforcing the bearish sentiment.
The Daily Nifty 50 chart
- General Discussion
- Traders who bought on the reversal from the bottom of the channel should remain in their positions with a stop-loss.
- Bears should avoid selling at this level since the market is currently near the bottom of the bearish channel. Instead, they should wait for the market to either break below the channel or move closer to the top before considering short positions.
- Deeper into Price Action
- Bears attempted to break below the channel but failed to get a follow-through bar. Instead, the bear breakout was immediately followed by a bullish bar.
- When a breakout is followed by a weak or failed follow-through, traders often take the opposite position. For example, if the market breaks below a channel but does not get a strong follow-through, traders will buy at the close of the weak follow-through bar. This strategy often results in a gap-up move.
- Patterns
- The market is currently trading within a broad bearish channel, meaning both bulls and bears have opportunities to profit. Bears can sell near the high of the channel, while bulls can buy near the bottom.
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