Market Overview: Nifty 50 Futures
Nifty 50 Bull Flag near All-Time High. This week, the market closed bullish with a long upper tail and is currently trading within a triangle pattern. After the bears made a strong reversal attempt, the bulls failed to continue the upward trend. Now, the market is in breakout mode, so traders should wait for a clear breakout on either side. The Nifty 50 recently gave a bullish breakout from a tight bear channel and has since shown increasing trading range price action on the daily chart. At present, the market is trading near the middle of this range.
Nifty 50 futures
The Weekly Nifty 50 chart
- General Discussion
- Traders in short positions may continue holding their trades until the market gives a strong bull breakout with a good follow-through bar.
- Traders in long positions may hold their trades with a tight stop loss at the nearest swing low, as the bulls have not been able to form strong consecutive bull bars since the start of the pullback.
- Traders who are not currently in any positions should wait for the market to give a breakout on either side. They may enter a short position on a strong breakout, but if the market gives a bull breakout of the bull flag, they should wait for a good follow-through bar before entering long.
- Deeper into Price Action
- The market has formed a V-shaped move since hitting the all-time high, which increases the chances that it is trading inside a large trading range.
- In a trading range, although individual legs may look strong, the market usually reverses in the opposite direction despite that strength. In such environments, traders should focus on buying low and selling high instead of relying too much on the strength of individual legs.
- Patterns
- If the bulls manage a breakout, the all-time high level will act like a magnet for the price. Additionally, traders can set targets for their long positions based on the measured move of the bull flag.
The Daily Nifty 50 chart
- General Discussion
- Traders who entered near the bottom of the trading range may continue holding their trades but with a tight stop loss.
- Traders who are not holding any positions should wait for the market to trade near the bottom or top of the trading range.
- Deeper into Price Action
- In small trading ranges, traders usually enter using limit orders instead of stop orders. This lowers the win rate, but the higher risk-to-reward ratio compensates for it.
- For example, if you want to go long near the trading range bottom, instead of placing a buy order at the top of a bull bar, you can place a limit buy order at the low of a weak bull or bear bar.
- Patterns
- If traders are able to get a successful breakout of this trading range, they can set a measured move target based on the height of the trading range.
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