Time to adopt 'Sell on Rise' strategy in Nifty Bank, Financial Services

According to Ravi Nathani, an independent technical analysts, the Nifty Bank Index is expected to face significant resistance around the 42,700 level in the near term.

Nifty Bank Index

Bias: Sell on Rise

The Nifty Bank Index, currently trading at CMP 42,216.70, is displaying a sideways pattern with a negative bias on the hourly charts, suggesting a potential bearish outlook for the remainder of the week. Based on the technical analysis, the following observations are made:

Resistance expected around 42,700: The index is likely to face a significant resistance level around 42,700, as indicated by the chart analysis. This level could act as a barrier to further upside movement and may trigger selling pressure.

Minor support levels expected between 4,1800 - 41,700 followed by 41,200: On the  downside, the index is expected to find minor support levels between 41,800 - 41,700, which could provide temporary buffers against potential downside momentum. If these support levels are violated, the next support level is anticipated at around 41,200, which could offer further support to the index.

Sell on the rise for near-term traders or wait for the index to trade near the support zone for fresh accumulation: Based on the technical analysis, a potential trading strategy for near-term traders could be to sell on the rise, considering the last week's rally and the current consolidation pattern that suggests the index may underperform in the near term.

This could result in a healthy correction for the short-term bullish trend seen on the charts. Alternatively, traders could wait for the index to trade near the support zone for fresh accumulation, as it could provide favorable opportunities for buying at lower levels.

In conclusion, based on the technical analysis of the Nifty Bank Index, a sideways pattern with a negative bias is expected for the near term, with resistance around 42,700 and minor support levels between 41,800 - 41,700 followed by 41,200. Selling on the rise or waiting for the index to trade near the support zone for fresh accumulation could be potential trading strategies for traders.

Nifty Financial Services Index

Bias: Sell on Rise

The Nifty Financial Services Index, currently trading at CMP 18,820.85, presents an interesting trading scenario when analyzed using hourly charts. Multiple technical indicators, including Bollinger Bands and RSI, suggest potential selling pressure and underperformance in the near term.

The index is currently trading at the Upper Bollinger Bands, with Bollinger Bands % B above 1, indicating possible selling pressure during rallies. Additionally, negative divergence in RSI further supports the notion of potential underperformance.

Based on these indicators, the recommended trading strategy could be to sell on the rise with a target of 18,525, while maintaining a strict stop loss above 19,100 on a closing basis.

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