'Buy-on-dips' strategy suitable for Nifty MidCap 50, suggests Ravi Nathani

According to the technical analyst, traders must adopt 'buy-on-dips' strategy for Nifty Energy, Nifty Commodities, and Nifty MidCap 50 indices

Nifty Energy
Last close: 21,801.80 (buy on dips)

The index has observed a downward trend in the near term, but there are several technical indicators that suggest the index could experience a potential uptrend. For instance, the Relative Strength Index (RSI) is flat, which could indicate that all dips should be bought from now onwards.

Furthermore, the Bollinger Bands are showing a support level around 21,400, while the Pivot levels are also showing a support level around 21,200.

Based on these technical indicators, it appears that the index will find support around 21,400 and 21,200, which could represent the best buying opportunity for the near and short term, as a technical bounce is expected.

In such a scenario, traders could potentially look to buy the index and its constituents at the above mentioned support range to capitalise on the potential uptrend.

Overall, the technical analysis suggests that the Nifty Energy inde could potentially experience a technical bounce in the near term, making it an attractive investment option for traders who can capitalise on the potential buying opportunity.

Nifty Commodities
Last close: 5,499.10 (buy on dips)

The index is currently trading in a range for the past 15 days. Despite a correction in the index, the RSI is trading flat, which indicates a divergence and suggests an opportunity to buy on each dip.

Additionally, the strong support for the index is expected at 5,480, as seen from the Pivot levels (S1) and the Bollinger lower band, both of which are also around 5,480.

Considering all these technical indicators, it is recommended to buy this index for near and short-term gains, with a strict stop loss of 5,400 on closing basis. This, therefore, will help limit the potential downside risk, while also maximising potential returns.

Overall, a cautious yet opportunistic approach is recommended for traders and investors looking to trade this index.

Nifty MidCap 50
Last close: 58,19.75 (buy on dips)

Charts suggests that the index indicates a sharp recovery from the intra-day lows, which signals that the selling momentum is likely to be halted in the near term. This recovery can be attributed to various factors, such as the index trading in a range of 8,800-8,400 for the past three months.

Additionally, the index bounced sharply from 8,400 levels and closed with a doji candle, indicating that the selling momentum may have come to a halt.

Moreover, there is a strict stop loss of 8,380 on the closing basis, making it an ideal buy on dips with a target of 8,750. Positive divergence on the histogram of MACD and flat RSI also indicate a positive outlook for the near term.

Furthermore, the index is available at lower Bollinger bands, suggesting a buying opportunity and an expected bounce in the near term.

Thus, combining all the technical indicators, a technical bounce could be expected in the near term, making it an ideal buying opportunity with a strict stop loss of 8,380 on the closing basis.

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