Financial Markets are fractal in attributes, means short term effects can change the long-term price action and Long term structure can influence the movements on Intraday Price action. To know more about the Fractals and to know how they’re related with price action, read my earlier article on Fractal Markets. Nifty’s Price action on 1 Hr chart can influence Long term Market participants. Current Price value of Nifty is 7700.10.
Below is the chart of Nifty on 1 hr time-frame ideally good for short-term trading.
1. Three push setup formation during last week
During last week, Nifty’s Price action formed three push patterns which is a counter trend formation. This indicates the weakness of sellers to push the prices lower. The pattern formed between key levels 7640 -7540. In price action, traders should focus on buying and selling pressure behind the patterns instead of blindly trading them. Read more about three push patterns in this article.
2. Sellers tried to push the prices lower at 7540 but failed.
Nifty found support at 7540, later selling pressure tried to squeeze the buyers at support level but failed. Market’s liquidity dried up in the zone and this action is visible as small candlesticks. On a lower time frame the market structure was like rectangle formation.
3. Strong Rejection pattern at 7525.
Price action failed to break the low at 7525.00 and rejected back sharply. Rejection pattern was supported by strong buying pressure; technically this is also Wyckoff’s spring formation. The shadow of Rejection pattern gives an estimate of Market condition and volatility.
4. Nifty bounced higher from 7540 to 7680.
Following the Rejection pattern at 7525, Nifty bounced higher from 7540 to 7680. But the question is whether the move has any real conviction of Market participants or is it just another liquidation effect due to positioning factors. Price action literally broke the long-term resistance level at 7666.74 but to confirm the strength of buyers, Nifty should trade above the resistance zone.
5. Traders should focus on Price action to get an idea of Market sentiment
To get a better picture and idea of present market conditions, we should check the price action above the resistance at 7666.74. Any sign of strong selling or buying pressure can influence the long-term market sentiment; also watch for potential trading opportunities.
