Market Overview: Nifty 50 Futures
Nifty 50 Tight Trading Range on the weekly chart. This week, the market gave a weak bearish close with a small body and tails on both sides. It attempted a bearish breakout of the trading range but failed to deliver a strong close. On the daily chart, Nifty 50 had broken out of the bull channel a few days ago and is now showing trading range price action. This is reflected through weak closes with long tails and the formation of patterns like an inside bar, which signals trading range price action.
Nifty 50 futures
The Weekly Nifty 50 chart
- General Discussion
- Traders who are in a long position may continue holding their trades, as the bears failed to give a strong bearish breakout of this tight trading range, and the strong bearish close of the previous week did not receive good follow-through.
- Traders who are in a short position may continue holding their positions, but with a tight stop loss, as reversal attempts are not getting follow-through.
- Traders who are not holding any positions may enter into a long position based on a trigger from a lower time frame. A lower time frame is preferred because the market is trading inside a tight trading range.
- Deeper into the price action
- Over the last several weeks, the market has been forming many bars with small bodies and long tails on both sides. In such conditions, traders should enter and manage trades as a trading range rather than taking swing positions.
- Patterns
- If the market gives a breakout on either side, traders can expect a measured move up or down based on the height of the range.
The Daily Nifty 50 chart
- General Discussion
- Traders who shorted on the bearish breakout of the channel and are still holding their trade may continue to hold, but with a very tight stop loss. Since the market is in a trading range price action phase, quick reversals are expected, which may eat into profits.
- Traders who expected the channel to convert into a trading range after the bearish breakout and entered a long position on the strong bull bar may continue to hold their trade.
- Deeper into price action
- Usually, if the market gives a bearish breakout of a bull channel, the chances are high that the market will form a trading range equivalent to the size of the bull channel.
- Patterns
- The market has formed an inside bar. Bulls gave a breakout but failed to deliver a strong close. Now, bears may try selling at the low of this breakout bar, as many bulls who bought near the high of the inside bar are trapped.
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