Market Overview: Nifty 50 Futures
Nifty 50 Double Bottom on the weekly chart. The market closed strongly bullish this week after forming a double bottom pattern. It also gave a bullish breakout from the bear channel. If the bulls can sustain this breakout, the chances of the market reaching the measured move up will increase. On the daily chart, Nifty 50 is forming a bull micro channel and has broken out of the broad bull channel it was trading in.
Nifty 50 futures
The Weekly Nifty 50 chart
- General Discussion
- Bulls who entered on the bull breakout, or were already in a long position, should continue holding their trades until the market either reaches the measured move target or starts forming strong, consecutive bear bars.
- If the market fails to get a good follow-through after the bull breakout and instead forms a strong bear bar in the following week, bears may consider entering short positions. This would suggest that the market has transitioned from a bear channel into a broader bear channel.
- Deeper into Price Action
- The market is currently producing large surprise bars without any consistent follow-through. This behavior indicates that the market is still operating within a trading range.
- In such conditions, traders should avoid holding positions for large swings. Instead, they should focus on taking quick exits to lock in profits and prevent potential reversals from wiping out gains.
- A significant number of bears entered short positions at the close of the bear breakout bar that formed at the wedge bottom. This move resulted in many bears getting trapped. However, when the market returned to the breakout level, those trapped bears exited at breakeven, which led to a sharp spike upward.
- Patterns
- The market appears to be forming a double bottom pattern. If the price successfully breaks out above the neckline of this pattern, it could trigger a measured move upward. The potential target would be calculated based on the height of the double bottom structure.
The Daily Nifty 50 chart
- General Discussion
- Traders who are in a long position should continue holding their trades, as the market is forming a bull micro channel. This implies there is at least a 60% chance that the market will form a second leg up before any reversal. Therefore, these traders should only consider exiting on the second leg up or if the market starts forming consecutive bear bars before the second leg (which happens in 40% of scenarios).
- Traders who are not currently in any position should wait for a pullback in the market and then enter on a High 1 or High 2 entry bar.
- Deeper into Price Action
- This bull micro channel has an open breakout gap, which increases the chances of a measured move up based on the height of the previous bull leg, following the concept of a measuring gap.
- If the bulls fail to get a follow-through and instead form strong consecutive bear bars, this would indicate that the market is trading inside a broad bear channel or a trading range.
- Patterns
- The market is currently trading inside a bull micro channel and is now forming a V-shaped move with the previous bear leg. This reduces the probability of the bull trend continuing, as such formations usually lead to a trading range.
Market analysis reports archive
You can access all weekend reports on the Market Analysis page.
