Traders can adopt buy-on-dips strategy for Nifty Energy index: Ravi Nathani

Since the index is trading at 22427.65, it is expected to exhibit some sideways movements, trading within a range of 500 points. The upper limit of this range is expected to be around 22,650, while the lower limit is anticipated to be around 22,150.

It is important to note that as Relative Strength Index (RSI) is slowly moving higher, this signals that each dip in the index should be considered an opportunity to accumulate for traders and swing players.

Therefore, the best trading strategy for short-term and swing traders would be to buy the index on dips, with the expectation of outperformance in the near future. This strategy is supported by the technical indicators, which indicate a bullish trend in the index.

With the RSI moving higher and the index trading within a range, traders should keep a watchful eye on the range levels and accumulate on each dip.

Earlier, we noted that the Nifty Commodities index was in a near-term downward trend, however, a recent sharp correction confined the index within a trading range.

It was suggested that if the index managed to trade above 5,490, there was a possibility of a pullback, and if it fell below 5,490, it could find support around 5,325, which would provide an opportunity for investors to accumulate this index and its constituents.

The best trading strategy at the time was to take a calculated risk by buying at the current market price with a stop loss of 5,490 for riskier traders or to wait for a correction to conclude and then accumulate around 5,325 levels for safer investors and traders.