Handy 50 index
The Nifty 50 Index is currently trading at 22,952.00 and has risen significantly in the short term, putting it close to a firm resistance zone around 23,050. If the index manages to trade above this level, there could be profit booking as it hits a new lifetime high. Above 23,050, further resistance levels are expected at 23,125, 23,200 and 23,300.
Conversely, if the index falls below 22,900 at close, it is likely to find support at 22,750, 22,575 and 22,450. Given the index’s current placement on short-term charts, the best trading strategy would be to book profits at the current market price (CMP) or on any upside. Alternatively, traders could consider selling if the index trades below 22,900, targeting the support levels mentioned.
For those who have booked gains on CMP or on a rise, it would be wise to wait for the index to reach the specified support levels before building the index and its components on dips.
The overall trend remains bullish and the index is expected to outperform in the longer term. Therefore, the net trading strategy involves selling at CMP or on the upswing and then buying near the support levels for smart and quick returns.
This approach allows traders to take advantage of current market conditions while preparing for potential dips that provide buying opportunities in line with the bullish trend.
Useful Midcap Select index
The Nifty Midcap Select Index is currently trading at 11,444.30. Given the overbought conditions indicated by technical indicators such as Stochastics and RSI, a period of underperformance could be expected.
Therefore, the best trading strategy would be to sell the index and its components on any rise or at the current market price (CMP), with a strict stop loss of 11,550. Support levels on the charts are expected at 11,325, 11,200 and 11,100.
Traders and swing traders should avoid rushing into buying this index as it could correct further. The optimal buying opportunities are expected at the support levels of 11,000, 10,850 and 10,780. These levels would provide the best opportunities for traders and swing traders to accumulate and build bullish positions for short-term gains.
In summary, the strategy involves selling on gains or at CMP while waiting for the index to reach the lower support levels to make bullish entries. This approach takes advantage of current overbought conditions to capture potential gains from the expected correction and positions traders to take advantage of subsequent rebounds at strong support levels.
(Disclaimer: Ravi Nathani is an independent technical analyst. Opinions are his own. He holds no positions in the above indices 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 buy or sell such securities.)
First print: May 27, 2024 | 6:35 am IST