Nifty trading at higher band levels, near breakout: see key levels here
Handy 50 index
The Nifty 50 Index is currently trading within a short-term range of 22,800 to 21,700. A breakout above or below this range could signal the next change in direction for the index. Since the index is currently trading close to the upper end of the range, the optimal short-term trading strategy would be to sell on any rallies.
Traders should consider placing a strict stop-loss order at 21,800 on a closing basis to effectively manage risk. This stop-loss level serves as protection in case the index moves against the desired direction. During this period of underperformance, the index is expected to find support levels at 22,350, 22,230 and 22,025.
These levels can act as areas of buying interest where traders can look for opportunities to initiate long positions. It is advisable to place stop-loss orders slightly below the lower range of the consolidation to limit potential losses. On the upside, resistance levels for the week are expected at 22,600, 22,725 and 22,936.
These levels could pose a challenge to further upward moves in the index, reinforcing the selling strategy on rallies. In summary, the recommended trading strategy for the Nifty Index in the short term is to sell on rallies, with a strict stop-loss at 21,800.
Traders must remain vigilant for price action around support and resistance levels in order to make informed trading decisions and adapt to changing market conditions.
Useful Mid Select index
The Nifty Mid Select Index is currently trading at 11,063.95 and appears to be at the upper end of its short-term range. This indicates a potential selling opportunity for traders in the short term.
Given the index’s current placement within its range, it is expected to underperform and correct in the coming days. This outlook is supported by the observation that the index is in a range of 11,200 to 10,200.
A decisive close above or below this range on a weekly basis means a break in the charts, providing clarity on the next change in direction. Until a clear breakout occurs, the recommended trading strategy is to sell on rallies and book profits.
Traders should keep a close eye on price action around support and resistance levels. Buying near support levels and selling near resistance levels reflects the current market environment within a certain range.
By adhering to this strategy, traders can take advantage of short-term swings within the established range while waiting for a decisive breakout for clearer directional cues. It is essential to remain agile and adjust trading decisions based on emerging market dynamics and technical signals.
Disclaimer: Ravi Nathani is an independent technical analyst. Opinions are his own. He has 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 6, 2024 | 6:32 am IST