Charts signal likely pullback for Nifty Consumption index: Ravi Nathani

According to the technical analyst, the Nifty Consumption index is likely to witness a pullback, and the support range of 7,036 - 6,980 is likely to provide a base for a technical bounce

Nifty Consumption
Last close: 7,108.90

The bias in the market is for a pullback to occur. This is because the index has experienced a sharp sell-off from its recent highs and has now reached a support range of 7,036 - 6,980.

The support range is expected to provide a base for the index to recover and initiate a technical bounce, given multiple indicators that suggest a buying range. These indicators include the pivot points, price action, and bollinger bands.

The pivot points indicate that the index has reached a critical level of support, which could lead to a reversal in the trend. The price action, meanwhile, shows that the index has been oversold and is due for a rebound. The bollinger bands, on the other hand, indicate that the index is trading near the lower band, which could serve as a strong support level.

In light of these indicators, traders and opportunistic investors are advised to hunt for opportunities to buy the index and its constituents within the aforementioned support range of 7,036 - 6,980. This, therefore, would allow them to capitalise on the potential for a technical bounce and take advantage of the buying range.

In conclusion, the Nifty Consumption index is currently in a position where a pullback is expected, and the support range of 7,036 - 6,980 is likely to provide a base for a technical bounce. Therefore, traders and investors should look for opportunities to buy within this range.

Nifty Commodities
Last close: 5,461.05

After experiencing a sharp sell-off on hourly charts, a technical bounce has been seen. However, resistance is expected around 5,475, and once it breaks this level, stiff resistance shall be seen between 5,540 - 5,590. Once the index reaches this range, one could expect a halt of the near-term pullback, and a correction could be expected on charts.

The index trend is negative, and a possible target of 5,100 and 4,950 in the short term could be expected. This means that traders and investors should be cautious about entering into long positions as the index could face strong resistance in the near term.

The best trading strategy would be to wait for the index to break resistance levels and enter into long positions only after confirming the trend reversal.

Moreover, traders and investors should keep an eye on global commodity prices, which could have an impact on the Nifty Commodities index. A surge in commodity prices could lead to an increase in the index, whereas a decline in commodity prices could lead to a decrease in the index.

Therefore, keeping a close watch on global commodity prices and understanding their impact on the index could be helpful in making informed trading decisions.

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