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Nifty Energy Index: Bullish Trend with Profit Booking Expected
The Nifty Energy Index is currently in a bullish trend, but it has reached a critical resistance level at 44,325 in the near term. As the index approaches this level, traders should consider booking profits and reducing long positions. Profit booking is expected to occur on any further rise from this resistance point. For those looking to re-enter, a pullback is anticipated, with support levels on the charts at 43,800, 43,600, and 43,200. The best trading strategy would be to take profits at the current market price (CMP) and wait for a pullback towards these support levels before initiating fresh long positions. This approach will allow traders to enter the market at more favorable levels after the profit booking phase concludes.
Nifty Pharma Index: Range-Bound with a Sell-on-Rise Opportunity
The Nifty Pharma Index remains range-bound, trading between 23,450 and 22,925. A close above or below these levels would act as a directional trigger, leading to either a bullish or bearish breakout. Until such a breakout occurs, the best strategy is to wait for clearer signals. For risk-tolerant traders, buying near the support level of 22,925 and selling near the resistance level of 23,450 is a viable approach, with a strict stop-loss at the breakout levels. However, multiple technical indicators suggest the index is overbought, increasing the likelihood of a pullback. A sell-on-rise strategy is more appropriate in this scenario, especially for traders looking to avoid excessive risk. It would be prudent to wait for a breakout before making any significant moves, but selling near resistance levels presents a lower-risk opportunity in the current conditions.
Conclusion
For the Nifty Energy Index, the key level to watch is 44,325, where traders should book profits and wait for a pullback towards the support levels before considering fresh long positions. In contrast, the Nifty Pharma Index remains range-bound, but overbought conditions suggest a sell-on-rise strategy is appropriate. Risk-averse traders should wait for a breakout from the range, while more aggressive traders can trade within the range with tight stop-losses. Both indices present profit-taking opportunities in the near term, and waiting for better entry points post-correction is the ideal strategy.
(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: Sep 27 2024 | 6:17 AM IST
