Market Overview: Nifty 50 Futures
Nifty 50 Wedge Top on the weekly chart. The market closed strongly bullish this week and is now trading near the top of the wedge top pattern. It is currently forming the second leg up after a strong bullish move. The Nifty 50 is still about 1000 points away from its all-time high. On the daily chart, the market is trading within a bull channel. This channel includes both strong bullish bars and bearish bars, with weak follow-through in both directions.
Nifty 50 futures
The Weekly Nifty 50 chart
- General Discussion
- Traders who entered a long position on the high-1 opportunity should not exit, even if the market is near the top of the wedge top. They should only exit if the market shows a strong bearish close or forms consecutive bearish bars.
- Traders who expected the high-1 to fail and shorted at its high can exit at the next open, as they have been trapped.
- Traders who are not in any position should wait for the next close. The market is currently in breakout mode, with a 50-50 chance of either a bullish or bearish breakout.
- Deeper into the Price Action
- The market is forming a bullish leg after a strong bearish reversal attempt. This strong bullish leg significantly reduces the chances of a full reversal. At best, bears may get a trading range, but not a complete reversal.
- Patterns
- Before the strong bearish reversal attempt, the market was in a strong bullish trend. Together, these phases have formed a bull flag, and the market has now broken out upward from this flag.
The Daily Nifty 50 chart
- General Discussion
- Traders who are in a long position should exit their positions as the market is now trading near the top of the bull channel.
- Traders who are not in any position can place stop orders at the low of the bear bar to enter a short position.
- However, since the bear bar is small, the chances of a profitable trade are low. Traders looking for a comparatively higher probability can wait for the market to form a strong bear bar and then sell.
- Deeper into Price Action
- While the market is forming a strong bull channel, the bars inside the channel have overlapping bodies and weak follow-through, which is typical of trading range price action.
- Moreover, patterns like inside bars, outside bars, and inside-outside-inside bars are usually seen inside trading ranges or when the market is moving sideways.
- Due to these characteristics, the chances of a trading range or a broad channel forming after the breakout are high.
- Patterns
- The market is trading inside a bull channel, and generally, the chances of a successful bull breakout are around 25%.
- If the market gives a successful bull breakout from the channel, traders can expect it to at least reach the measured move target based on the inside-outside-inside bar pattern.
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