Market Overview: Nifty 50 Futures
Nifty 50 Bear Micro Channel on the weekly chart. This week, the market delivered another strong bearish close, with the candle ending near its low. However, it has still not reached the failed bull breakout’s measured move target on the downside. On the daily chart, Nifty 50 has broken below its trading range, and the bears now need a strong follow-through bar to confirm a successful breakout. As the market is trading near the key round number of 25,000, if the bears fail to produce this follow-through, traders can expect sideways movement in the coming weeks.
Nifty 50 futures
The Weekly Nifty 50 chart
- General Discussion
- Traders holding short positions should continue to hold, as the market is in a strong bear channel and the measured move target has not yet been reached.
- Traders not currently in a position can wait for a pullback and enter on a Low-1 short, or short on the next open with a wide stop loss.
- If the market shows a surprisingly strong pullback (for example, strong consecutive bull bars), bulls can enter long, betting on the failure of the Low-1 setup or a second-leg-down failure.
- Deeper into the Price Action
- What are the chances the market will make a second leg up or down? Usually, when the market is in a trending phase—such as a bull trend—the chances of a second leg up are much higher before a reversal.
- However, in a ranging phase, the chances of a second leg up are lower. Instead, the market often forms V-shaped patterns, where even after a strong leg, it quickly moves in the opposite direction without forming a second leg.
- Patterns
- If bulls fail to produce a strong pullback and instead only form weak bull bars, the market is likely to turn into a tight bear channel or a bear channel. In this case, traders can short near the high of the channel or on a Low-2 setup.
The Daily Nifty 50 chart
- General Discussion
- Traders who shorted near the top of the trading range and are still holding their positions can continue to hold until the market forms strong consecutive bull bars.
- Traders who entered a long position near the bottom of the trading range can either exit their trade or wait for the next close. If the bears manage to produce a follow-through bar, exit; otherwise, hold the position.
- Deeper into Price Action
- The market is currently in a trading range phase. When holding a position, look for the nearest major support or resistance levels, as reversals are common in this type of phase.
- Patterns
- If the bears successfully produce a strong follow-through bar, traders can expect the market to move down by a measured amount based on the height of the trading range.
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