Nifty Energy Index
The Nifty Energy Index is currently in a consolidation phase, trading within a range of 43,650 to 43,000. This range-bound movement suggests that the market is waiting for a decisive breakout in either direction before making a significant move. For traders, this presents an opportunity to plan their strategy based on the eventual breakout. If the index closes above 43,650, it could signal a bullish breakout, with the next resistance levels expected at 43,950, 44,375, and 44,650.
In such a scenario, traders might look to enter long positions, anticipating further upward momentum as the index pushes through these resistance levels. On the other hand, if the index breaks below and closes under 43,000, it would indicate a bearish breakout. The subsequent support levels to watch would be 42,900 and 42,300.
A move below these levels could trigger further downside pressure, making it a potential opportunity for short sellers. Given the current consolidation, the best trading strategy would be to wait for a clear breakout in either direction before committing to a position.
This approach helps to minimise risk and allows traders to align with the emerging trend, whether it turns bullish or bearish. Patience and discipline will be key in navigating this range-bound market, as premature trades could lead to unnecessary losses.
Nifty Metals Index
The Nifty Metals Index is displaying bullish momentum on the charts, suggesting that the recent correction phase is likely to be followed by an outperformance in the near term. This outlook indicates that the index, along with its constituents, is poised for a recovery and potential upward movement, making it an attractive opportunity for traders. Given this bullish scenario, the recommended trading strategy is to buy the index on dips. This approach allows traders to capitalise on the expected rebound while minimising risk.
The target resistance levels to watch in this upward move are 9,450, 9,590, and 9,800. These levels represent potential points where the index might encounter selling pressure, so it’s crucial to monitor them closely. To protect against downside risk, traders should place a stop-loss below 9,100 on a closing basis.
This stop-loss level acts as a safety net, ensuring that any unexpected downturns do not result in significant losses. In summary, the best trading strategy for the Nifty Metals Index in the near term is to buy on dips, aiming for the resistance levels mentioned, while maintaining a disciplined approach with a stop-loss set at 9,100. This strategy aligns with the bullish trend on the charts and provides a structured plan for taking advantage of the expected outperformance in the index.
(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.)
First Published: Aug 23 2024 | 6:48 AM IST
