Market Overview: Nifty 50 Futures
Nifty 50 Increasing Trading Range Price Action on the monthly chart. The market closed bearish this month after a strong bullish leg. The bear bar is closing near its low, and a strong follow-through bar will increase the chances of a bearish leg instead of a continuation of the bullish trend. If the bears manage to initiate a bearish leg, it will also confirm the triangle pattern. Nifty 50 is trading within a bearish micro channel, which currently has six consecutive bear bars. The probability of a second leg down is very high before any potential upward reversal.
Nifty 50 futures
The Monthly Nifty 50 chart
- General Discussion
- Traders who went long on the bullish outside bar at the start of this bull leg may hold their positions with a tight stop or exit if the bears manage to get a strong follow-through bar.
- Traders not holding any positions should wait for the next close. If the bears can give a strong bearish close, traders can enter short positions with a minimum target set at the triangle bottom.
- Bears who shorted after the strong bearish close following the bull leg may hold their positions with a tight stop loss and exit if the bears fail to form a good follow-through bar.
- Deeper into the price action
- The market is showing increasing trading range price action. Characteristics of trading ranges include long tails on either side of the bars, bars with overlapping bodies, sharp V-shaped moves (strong up move followed by a strong down move and vice versa), inside bars, and outside bars.
- Patterns
- The market is forming a double top pattern. If the bears are able to get a bearish breakout of the neckline, traders may expect the market to move down based on the height of the double top pattern.
The Weekly Nifty 50 chart
- General Discussion
- Traders holding short positions may continue to do so until the market transitions into a bear channel or broad bear channel.
- Since the market is trading near the big round number 25000, this indicates increased trading range price action. Therefore, traders should look for quick exits instead of holding for swings.
- Short traders must exit quickly if the bulls form a strong bull bar or strong consecutive bull bars.
- Traders who are not holding any positions may wait for the market to show signs of a reversal. This might happen soon as the market is trading near the magnet (big round number).
- Deeper into price action
- The market failed to produce a successful bull breakout, as the strong bull bar did not receive a follow-through. Traders can expect a measured move down based on the height of the bull breakout.
- Patterns
- A bear channel, where the high of each bar is lower than the high of the previous bar, is called a bear micro channel. Similarly, a bull micro channel is a bull channel where the low of each bar is higher than the low of the previous bar.
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