Nifty Auto Index Technical Analysis
Range-Bound Trend Observed
The Nifty Auto index is currently navigating a range-bound trend on the charts, moving between the levels of 25,460 and 24,560. This pattern suggests a strategic approach for traders: sell when the index nears the upper resistance level and buy when it approaches the lower support level.
Key Levels to Watch
If the Nifty Auto index breaks above the upper range of 25,460, the next resistance level to watch would be 25,650. Conversely, if the index dips below the lower range of 24,560, the next support level to monitor would be 24,250.
Current Market Position
With the index trading close to its higher resistance level of 25,460, the prudent approach would be to consider short selling or booking profits at this juncture. The rationale behind this strategy is that the index is more likely to face selling pressure near the upper boundary of its range, leading to a potential pullback.
Technical Indicators and Chart Patterns
Technical indicators and the current chart pattern support the view of short-term selling pressure. Traders and investors should remain cautious and look for signs of reversal at these key levels. Selling near the resistance allows traders to capitalize on the anticipated downward movement while managing risk effectively.
Strategy Summary
In summary, the Nifty Auto index is range-bound with defined levels of 25,460 and 24,560. The recommended strategy is to sell near resistance and buy near support. Watch closely for any breakouts, as a move above 25,460 could lead to resistance at 25,650, while a break below 24,560 would find support at 24,250. With the index near its higher resistance, short selling or booking profits is advisable.
The Nifty Energy Index
Downtrend in Near Term
The Nifty Energy index is currently exhibiting a downtrend in the near term. With a stoploss set at 42,200 on a closing basis, the best trading strategy is to sell the index, targeting levels of 41,150 and 40,800.
Critical Levels to Monitor
It’s important to keep a close eye on the 40,500 level. A trade below this level would present an excellent opportunity for swing traders to accumulate the index. Such a move could lead to a quick pullback, offering smart returns.
Technical Indicators and Chart Patterns
The technical indicators and chart patterns support this bearish outlook, indicating that further downside is likely. The rationale behind this strategy is that a break below 40,500 would likely trigger short-term buying interest, driving a rebound in the index.
Strategy Summary
In summary, the Nifty Energy index’s near-term trend is downward, with critical support levels at 41,150 and 40,800. Traders should maintain a stoploss at 42,200 and look for opportunities to sell at current levels. Additionally, a break below 40,500 would provide a favorable entry point for swing traders aiming for a quick pullback and potential gains. This approach allows traders to capitalize on the anticipated movements while managing risk effectively.
(Disclaimer: Ravi Nathani is an independent technical analyst. Views are his own. He does not hold any positions in the indices mentioned above, and this is not an offer or solicitation for the purchase or sale of any security. It should not be construed as a recommendation to purchase or sell such securities.)