Nifty Energy paves way for positive breakout; adopt buy-on-dips strategy

According to Ravi Nathani, an independent technical analyst, charts reveal an encouraging trend for Nifty Energy index, signaling a positive breakout

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Ravi Nathani Mumbai

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Navigating Nifty Energy: A simple strategy for potential gains

The Nifty Energy index (last close: 26,418.95) is catching attention of traders who seek profit opportunities. A straightforward yet effective approach to maximise gains is to adopt a "buy on dips" strategy. This entails purchasing the index when its price experiences a temporary decline. To ensure a safety net, it's advisable to set a robust stop-loss at 26,100. This precautionary measure shields traders from significant losses in case the market takes an unfavorable turn.

However, the strategy goes beyond merely investing in the index itself. Diving deeper, traders should consider buying the individual components of the index. This diversified approach spreads the risk and enhances the potential for returns.

Examining recent developments on the hourly charts reveals an encouraging trend. Following a period of stability, the index displays a positive breakout, indicating an upward movement. In the short term, traders should be aware of potential resistance levels at 26,900 and 27,550.

To effectively manage risk, it is vital to adhere to the stipulated stop-loss level, maintaining it below 26,100 upon the market's closure. By exercising caution and employing this simple yet strategic approach, traders can navigate the complexities of the market, make informed decisions, and potentially secure profitable outcomes.

Nifty Commodities index: Charts exhibit range bound moves

Looking at the charts, it seems that the Nifty Commodities index (last close: 6,307.3) is moving within a limited range, bound by 6,325 on the upper side and 6,235 on the lower side.

For effective trading strategies, it is important to watch out breaches of these levels. Traders who are comfortable with higher risks might think about selling when the index reaches resistance (6,325) and buying when it nears support (6,235).

On the other hand, those who prefer a more cautious approach should wait for a clear breakout on the charts before making any trades. This means waiting for a confirmed move above 6,325 or below 6,235 before deciding which direction to trade in.

In simple terms, the Nifty Commodities index is moving within a specific range, and traders have different options based on their risk tolerance. Some might consider selling near resistance and buying near support, while others may wait for a definite breakout before making any moves, aligning their actions with the direction of that breakout.

Disclaimer: Ravi Nathani is an independent technical analyst. Views expressed are personal. He doesn't hold any positions in the indices mentioned above and this is not an offer or solicitation for the purchase or sale of any security.

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First Published: Aug 11 2023 | 7:09 AM IST

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