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Nifty Trends

Nifty Trends: What Should You Watch Out for?

Trading on the Nifty index is characterised by different types of trading patterns that vary with each day. These patterns can be broadly categorized into three categories and understanding these can help you get a better grip on market conditions. This way you can maximize profits while minimizing risk.

  • The first types are known as trend days wherein the market moves up and down during the trading period. Quite often certain news events can change a bullish market to bearish or vice versa. Normally, trend days do not last for more than two days in a row. Reversal or consolidation usually follows trend days.
  • The second type is reversal days where stock hits a strong high price during the day and then reverses back. On a daily Nifty chart these points can be seen as shooting stars or hammers. A trend day is likely to follow a reversal day.
  • Consolidation or range days make up the third category. These usually follow a trend day and during this time there are no significant changes to the market sentiment.

Understanding Nifty Trends

Online calculators are available that can help you figure out the trend in Nifty options or Nifty future trading once you input the required data. The three common market scenarios are a bull market, a bear market, and a ranging market. Bull and Bear markets are known as the primary trend. A ranging market also known as an intermediate trend, is not considered a good one for trading and can be volatile. They can vary from very short periods to extremely long ones.Intraday trading is dependent on the market trends and technical analysis is helpful in understanding these trends.

Various types of charting software are available nowadays for this purpose.Tracking trends on the Nifty can be quite tricky given the number of indices that are available in the Indian stock market. It is also important to remember that the market does not always move in trends. Professional traders are adept at making profits in a trending market.
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