Market Overview: Nifty 50 Futures
Nifty 50 Inside Bar on the weekly chart. This week, the market closed with a small bull bar following a strong bear bar that had closed near its low. The bull bar represents weak follow-through for the bear bar and is more likely to result in a trading range than a reversal. Currently, the market is trading within a wedge, suggesting that traders might expect it to move toward the bottom of the wedge. On the daily chart, Nifty 50 has been exhibiting increasing trading range price action and is presently trading within a triangle pattern.
Nifty 50 futures
The Weekly Nifty 50 chart
- General Discussion
- Traders who shorted the close of the strong bear bar can hold their short positions until the market reaches the bottom of the wedge. Once it reaches the bottom, traders can decide whether to hold or exit their positions based on the strength of the bear bars.
- The bull bar this week opened above the previous close, indicating that many bulls bought the close of the strong bear bar. As the market has closed with a bull bar this week, traders who bought the close of the previous bar can continue holding their trades.
- Traders who have not yet entered a trade should wait for the market to either break out of the wedge with a bull move or reach the bottom of the wedge before making a decision.
- Deeper into Price Action
- Despite the strong bear bar closing near its low, the bears were unable to achieve a follow-through bar. This failure increases the likelihood of a trading range developing.
- Within the wedge, bulls continue to achieve strong closes and robust bull legs, which further diminishes the probability of a bear reversal.
- Patterns
- The market is forming a wedge pattern. If the bulls manage to secure a breakout, this could result in a measured move upward based on the height of the wedge.
- The market is also forming an inside bar pattern. If the bears achieve a strong breakout of the inside bar, the market could move downward by an amount equivalent to the size of the inside bar.
The Daily Nifty 50 chart
- General Discussion
- Traders who shorted on the head and shoulders breakout failure can continue holding their short positions until the market forms a strong bull bar.
- Traders should avoid entering a long position since the market is currently trading in a bear leg within a broad bear channel.
- Deeper into Price Action
- Last week, the market formed several doji bars with small bodies and long tails on both sides. The increase in trading range price action suggests that the market may soon transition into a trading range.
- Additionally, both bulls and bears have been able to achieve large, strong bull and bear bars, further increasing the likelihood of a trading range.
- Patterns
- As the market is trading in a broad channel, traders can approach it as a trading range by buying low and selling high.
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