Ravi Nathani decodes how to trade Nifty50, Nifty Bank amid volatility

According to the technical analyst, traders must remain cautious while trading Nifty50, in order to maximise gains and minimise losses

Nifty50
Last close: 17,465.80 

The benchmark index is exhibiting a high degree of volatility in the recent past. In the light of this, traders and investors have been devising different strategies to capitalise on the market movements. Based on the technical charts, there are three discernible trading strategies that traders can pursue:

The first strategy is to buy at the current market price, with a stop loss of 17,350 set on a closing basis. This approach suggests that the index is likely to continue its upward trajectory, and traders can benefit from this trend by buying at the current market price. However, it is essential to have a stop loss in place to limit potential losses in case the market turns against the trader.

The second strategy involves selling the index once it dips below the 17,350 threshold. This approach suggests that the index is likely to decline in the near term, and traders can benefit from this trend by selling at the opportune moment. The target ranges for this strategy are set at 17,200 and 16,990, which represents potential support levels for the index.

The third strategy is to buy the index above the 17,700 threshold, with a target range of 18,300 and 18,550. This approach assumes that the index is likely to exhibit a strong bullish trend, and traders can capitalise on this trend by buying above the 17,700 threshold. The target range suggests that the index has the potential to reach new highs, which can result in significant gains for traders who buy at the right time.

Overall, the index remains volatile, and traders should exercise caution while implementing these trading strategies. It is essential to keep an eye on the market trends and adjust the trading strategy accordingly to minimise potential losses and maximise gains.

Nifty Bank
Last close: 39,909.40 

Charts suggest that a bearish trend may emerge once the index drops below the 39,400 threshold on a closing basis. However, until that point, there are no indications of bearishness on the charts.

As the index is trading in close proximity to the stop loss level, the risk reward ratio is favourable for bullish trades. Aggressive traders may choose to buy at the current market price with a target of 41,050, while more cautious traders may wait for the index to rise above 40,500 before buying, with the same target of 41,050.

If the index does break below the 39,400 level, the next level of support is anticipated at 38,780, followed by 37,860.

In summary, buying opportunities are available for the index until it falls below the 39,400-mark, at which point a bearish trend may emerge.

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