Market Overview: Nifty 50 Futures
Nifty 50 Near Channel Bottom. This week, the market delivered a very strong bear close near the lower trend line of the broad bull channel. On the weekly chart, the market appears to be in a trading range price action phase, so traders should manage their positions accordingly. On the daily chart, Nifty 50 is trading within a tight bear channel and is now approaching a previous support level.
Nifty 50 futures
The Weekly Nifty 50 chart
- General Discussion
- Traders who shorted near the top of the channel and are still holding a short position may consider exiting, as the market is in a trading range phase. In this phase, the probability of a reversal is higher than the continuation of the current leg. Some traders may prefer to wait for a clear reversal signal before exiting their positions.
- Traders who are not holding any position may consider entering a long position once the market gives a strong bull close, or they may wait for strong consecutive bull closes.
- Deeper into the Price Action
- The market has been trading inside a broad bull channel. A broad channel behaves very similarly to a trading range, which means both bulls and bears can make money.
- Patterns
- Note that within the broad bull channel, the bear leg is quite strong. This increases the chances of a second leg down before a reversal.
- In general, whenever the market forms a strong leg, the probability of a second leg in the same direction is high.
The Daily Nifty 50 chart
- General Discussion
- Traders who are currently in a short position may continue to hold their positions, as the market has been trading inside a tight bear channel.
- Traders who are not holding any position may wait for the market to give a pullback and then enter on a low-1. However, if the bulls are able to produce strong consecutive bull bars, traders may look to enter on a strong close or on a high-1.
- Deeper into Price Action
- Note that the bulls attempted to create a reversal by giving a gap up after the doji bar near the bottom of the channel, but they failed to get a strong close.
- Bulls may attempt another reversal around the low of the doji bar. If they fail again, the chances increase that the bears will be able to continue the downward trend.
- Patterns
- If the bears are able to achieve a strong bear breakout with follow-through, traders can expect the market to move down in a measured move based on the height of the channel.
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