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Nifty Auto index seen in downtrend, Energy range-bound; suggest charts

According to Ravi Nathani, an independent technical analyst, the Nifty Auto index can dip to 20,200 and 19,850 levels in the near term.

Between December 2020 and February 2021, traders were supposed to maintain at least 25 per cent of the peak margin
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Ravi Nathani Mumbai

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Nifty Auto Index

The Nifty Auto Index, currently trading at a CMP (Current Market Price) of 20,372.35, is showing a near-term downward trend on charts. The anticipated support levels are identified around 20,200 and 19,850.

In light of this trend, the recommended trading strategy is to sell on rallies, with a strict stop-loss set at 20,800 on a closing basis.

Technical indicators, such as the short-term Exponential Moving Average (EMA) and the Relative Strength Index (RSI), are signaling a downtrend. These indicators suggest that selling pressure is likely to persist during upward price movements.

Traders are advised to exercise caution and consider selling positions during rallies, aligning with the prevailing trend. The identified support levels at 20,200 and 19,850 serve as crucial points for traders to monitor. These levels may act as potential zones for rebounds or extended downward movements.

Implementing a strict stop-loss at 20,800 is essential for risk management, providing a predefined exit point in case of adverse market movements.

In summary, the Nifty Auto Index is currently exhibiting a downward trend, and the recommended strategy is to sell on rallies. Traders should closely monitor the support levels at 20,200 and 19,850 while adhering to a strict stop-loss at 20,800 to manage risks effectively. The technical indicators further reinforce the notion of a downtrend, guiding traders in their decision-making process.

Nifty Energy Index

The Nifty Energy Index, currently trading at a CMP (Current Market Price) of 38,748.05, is displaying a range-bound pattern on charts, delineated by levels at 40,150 on the upside and 37,850 on the downside.

The breaking or closing above or below this range is considered a triggering point, indicating potential directional movements.

Given the technical indicators like MACD, RSI, and short-term EMAs signaling a downtrend, suggesting an inclination towards selling pressure, the suggested trading strategy is to book profits on rallies. This implies taking advantage of upward movements to sell, anticipating a potential downturn.

Support on charts is anticipated around 35,700, and careful observation is recommended if the index breaks and closes below the lower range at 37,850. This level becomes critical as it may signify a shift in the prevailing trend.

For traders with a higher risk tolerance, going short at the current market price is an option. However, for safer trading practices, waiting for a confirmed breakdown below 37,850 is advised before initiating positions.

In summary, the Nifty Energy Index is currently range-bound between 40,150 and 37,850. Booking profits on rallies is favored, given the downtrend signaled by technical indicators. Traders are advised to keep a close watch on the critical support level of 37,850, with riskier traders considering short positions at the current market price and safer traders waiting for a confirmed breakdown.

(Ravi Nathani is an independent technical analyst. Views expressed are personal).

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First Published: Feb 29 2024 | 6:32 AM IST

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