Market Overview: Nifty 50 Futures
Nifty 50 Wedge Bottom on the weekly chart. This week, the market closed with a weak bullish sentiment and has yet to break out of the wedge bottom. It is also forming inside and outside bars, indicating a trading range price action. On the daily chart, Nifty 50 is trading within a bear channel. While the bulls attempted a breakout this week, they failed to achieve follow-through, causing the market to reverse back into the channel, increasing the likelihood of a trading range.
Nifty 50 futures
The Weekly Nifty 50 chart
- General Discussion
- Traders in a short position can continue holding until the market gives a strong bull breakout of the wedge bottom.
- Traders in a long position should continue holding as the chances of a successful bull breakout are higher than those of a successful bear breakout.
- Traders looking to enter a position should wait for the market to give a strong bull breakout of the wedge with a follow-through.
- Deeper into Price Action
- In the last few bars, the market has shown trading range price action, which is common when the market is in breakout mode.
- The bear reversal attempt is strong enough to reverse the bull trend, as after the first bear leg, the bears got a second strong leg down, indicating a reversal with strong follow-through bars.
- For a successful reversal, bears now need a strong bear breakout of the wedge bottom with a follow-through.
- Patterns
- The chances of a successful bear breakout of a wedge bottom are typically around 25%, while a successful bull breakout occurs approximately 75% of the time.
- Bulls attempted a breakout of the outside bar but failed to achieve follow-through.
The Daily Nifty 50 chart
- General Discussion
- Traders who bought near the bottom of the bull channel can exit, as the market has already reached the high, and the bulls failed to achieve follow-through after the breakout.
- Bears who shorted on the strong bear bar after the bull breakout of the channel can hold their positions but should maintain a tight stop-loss. This is because the bears are also struggling to achieve strong follow-through bars.
- Deeper into Price Action
- The previous bull leg was very strong, and strong bull legs are usually followed by a second leg up before a reversal. Traders can expect another upward move before the market reverses back into the channel.
- Patterns
- When the market is trading in a broad channel, both bears and bulls can profit by selling near the high and buying near the low.
- If the bulls achieve a successful bull breakout, traders can expect the market to reach the measured move up, calculated based on the height of the bear channel.
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