Nifty Weekly Charts: Inside bar pattern

Nifty View: Inside bar pattern on Weekly chart

In the morning I tweeted about Nifty making a "inside bar" pattern on weekly charts. Inside bar patterns occurs when Market trades between the high and lows of previous trading session. Here we are discussing weekly charts ( one candle for one week) hence 'inside bar' means for entire week Nifty failed to take out the highs and lows of previous week. This again point us in the direction which says markets are contracting and usually all contractions are followed up by expansion which might begin with an violent action.

Now why this pattern assumes significance is because this is something which is not very common, in 2018 it happened just 2 times and you can see both times it followed by a trend movement in Nifty.  Another point worth noticing is that last week candle was actually a Doji candle  (Doji signifies indecisiveness where open and close rates are almost same). So there are more than 1 or 2 factors which are saying that markets are ready to move from here now. 

Nifty Weekly chart

Markets can not remain in a range, off course they can spend some time in a narrow range but sooner or later they have to break. It happens because traders and investor get bored of seeing same prices day in day out. I do not want to predict the direction of the breakout however regular reader of my blog are aware that I have been bearish on Markets for quite some time so I wont be surprised if the breakout happens on the downside. I am bearish because charts and prices are telling me so but if charts changes tomorrow so will my views. As a trader, we have to be prepared for all scenarios ( including bullish ones) and while today charts are pointing down it can change anytime.

Just one word of caution, this contraction of range has become too obvious and most traders are now aware of it so don't be in any hurry to trade the breakout even if that means losing 40-50 even 100 points. I don't think it will be easy to trade going forward even though you  knows that break out is going to happen. Reason I say so is that  Initial break out may be (I say may be) a false breakout so first let market show that its actually broken out and trend has begun. No one can time the markets and no one can buy at bottom and sell at top so don't even think about doing so.