Nifty 50 Approaching Major Support

Market Overview: Nifty 50 Futures

Nifty 50 Approaching Major Support on the weekly chart. The market has pulled back significantly from the all-time highs around 26,400 and is now testing a major support zone near 21,800 to 22,000, which has acted as support multiple times during the bull trend that began in late 2023. This pullback represents a test of the bull channel trend line, and the response at this level will determine whether the always-in direction remains long or shifts to short. Traders may wait for the market to reach the support zone and observe whether bulls defend with strong reversal bars or whether bears break through with follow-through selling. On the daily chart, Nifty 50 has formed a Low-1 bear breakout and is now trading in a bear channel with consecutive lower highs and lower lows. The breakout below prior lows showed good follow-through with strong bear bars closing near their lows, suggesting that the always-in direction has shifted to short on the daily timeframe. Traders may look to sell on pullbacks to the bear channel trend line or wait for signs of exhaustion before considering long positions.

Nifty 50 futures

The Weekly Nifty 50 chart

The Daily Nifty 50 chart

• General Discussion
  • Traders who are holding a long position from the trading range may exit on any rallies toward the bear channel trend line or use this Low-1 bear breakout as an opportunity to exit at market prices with small losses. The market has broken below the prior lows and is showing follow-through with strong bear bars, which is a sign that the always-in direction has shifted to short. Traders holding longs should use tight stops below the most recent swing low or accept that the position is now against the trend.
  • Traders who are holding a short position from the breakdown may continue to hold with stops above the bear channel trend line. If the market rallies back into the channel and closes above the trend line with a strong bull bar, bears may consider taking profits. The current move shows good follow-through after the Low-1 breakout, and chances are that the market will test lower prices. Bears may move stops to breakeven or above recent swing highs as the market continues lower.
  • Traders who are not holding any position may enter short on pullbacks to the bear channel trend line, looking for bear reversal bars or failed breakouts above the channel. A safer entry would be to sell on a two-legged pullback that tests the bottom of the prior trading range or the bear channel trend line. Traders should use stops above the most recent swing high or above the bear channel trend line, which would be a wide stop but appropriate for the current volatility. Aggressive traders may sell at market prices, expecting the bear channel to continue.
• Deeper into price action
  • The market has formed a Low-1 bear breakout, which means bears broke below the most recent significant low and are showing follow-through to the downside. This type of breakout is significant because it represents a shift in market structure from a trading range to a bear trend. The breakout bars are relatively strong with closes near their lows, which indicates that bears are committed and bulls are not defending aggressively. This is the type of price action that often leads to a measured move down equal to the height of the trading range.
  • After the breakout, the market has formed a bear channel with clear lower highs and lower lows. Each rally within the channel has been met with selling, and the market is making consecutive lower lows. This is typical always-in short price action, where bulls who buy are quickly trapped and become sellers. The bear bars are larger than the bull bars, and there are few signs of strong bull closes that would indicate accumulation. This suggests that any rallies should be viewed as opportunities to sell rather than to buy.
  • The most recent bars show strong selling with large bear bars closing near their lows. There are no doji bars or overlapping bull and bear bars that would suggest the market is forming a trading range at this level. Instead, the market is trending down with conviction, and bulls have not yet stepped in to defend any price level. Traders should expect this type of price action to continue until there are signs of exhaustion, such as a series of doji bars, bull reversal bars with strong closes, or a break above the bear channel trend line.
• Patterns
  • The bear channel is the dominant pattern on this chart, with the market making lower highs and lower lows in a steady downtrend. The channel trend line connects the swing highs, and each rally to the trend line has been rejected with renewed selling. This is a textbook bear channel where traders should look to sell on pullbacks rather than buy. If the market breaks above the channel trend line with strong bull bars and follow-through, it would suggest that the bear trend is weakening and a trading range or bull reversal may be forming.
  • The Low-1 bear breakout pattern suggests a measured move target. The height of the prior trading range from approximately 25,000 to 26,500 (about 1,500 points) projects a target below 23,500 if measured from the breakout point around 25,000. The market is currently around 22,800, which means it has already achieved a significant portion of this measured move. However, bear channels often overshoot their measured move targets, and traders should not assume the selling is complete just because the target has been reached.

---

Market analysis reports archive

You can access all weekend reports on the Market Analysis page.

---