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Nifty Energy on decline, Nifty Pharma range bound: Know what charts suggest

The Nifty Energy Index, currently priced at 38,458.00, is displaying a downward trend in the near term according to the charts

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Illustration: Ajay kumar Mohanty

Ravi Nathani Mumbai

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Nifty Energy Index

The Nifty Energy Index, currently priced at 38,458.00, is displaying a downward trend in the near term according to the charts. In light of this trend, the optimal trading strategy would be to consider selling positions at the current market price (CMP) or to wait for a correction to complete. 

If the index price is trading below 37,000, it suggests a favourable opportunity to buy the index on dips. Traders should set a strict stop-loss order at 36,900 on a closing basis to manage risk effectively in case the price moves against expectations. 

On the upside, resistance levels to watch for are at 37,500, 38,000, and 38,300. These levels may act as barriers to upward price movement and could be potential areas to consider taking profits or exiting long positions. 

By following this trading strategy, traders can take advantage of the prevailing downward trend in the Nifty Energy Index. However, it's essential to remain vigilant and adapt the strategy as per evolving market conditions and price movements.

Nifty Pharma Index

The Nifty Pharma Index, currently trading at 18,437.05, is exhibiting a range-bound pattern on the charts. The identified range spans from 19,400 to 18,200. Until there is a decisive breakout above or below this range, traders are advised to exercise caution and wait for clearer signals. 

In such a scenario, the optimal trading strategy would be to remain patient and await a confirmed breakout. Traders may choose to refrain from initiating new positions until there is a clear direction indicated by the market. 

For more aggressive traders willing to take on additional risk, there may be opportunities to buy near the lower end of the range (18,200) and sell near the upper end (19,400). However, it's crucial to exercise caution and employ strict risk management practices, such as setting stop-loss orders, to mitigate potential losses. 

By adhering to this trading strategy, traders can navigate the range-bound conditions of the Nifty Pharma Index prudently and position themselves effectively for potential breakout opportunities while managing risk appropriately.

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.

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First Published: May 10 2024 | 6:32 AM IST

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