Book profits as Nifty Auto, Nifty Financial index trade in overbought zone

Nifty Financial Services is exhibiting a triangle-shaped pattern, which indicates a period of consolidation and uncertainty, says Ravi Nathani

Nifty Auto index

Last close: 14,819.45

On the charts, the trend for the Nifty Auto Index is upward. However, it is important to note that the index is trading in the overbought zone. This suggests that caution should be exercised as the market may be due for a correction. In terms of resistance levels on the charts, the Pivot level R2 is identified at 15,055. This level is expected to act as a stiff resistance for the current month.

Considering the overbought condition, it would be prudent for investors to book profits on any rise in the index. For traders, selling pressure can be expected only if the index trades below the R1 level of pivots, which is at 14,626. On the other hand, the pivot level itself, which is at 13,890, is expected to provide support.

In summary, the Nifty Auto Index is displaying an upward trend on the charts. However, caution is advised as the index is trading in the overbought zone. Investors are recommended to book profits on any rise. Traders should closely monitor the R1 level at 14,626 for potential selling pressure, while keeping an eye on the pivot level at 13,890 for support.

Nifty Financial Services index

Last close: 19,538.10

On the charts, the Nifty Financial Services is exhibiting a triangle-shaped pattern. This pattern indicates a period of consolidation and uncertainty in the market. It is important to note that the index is currently facing resistance in the range of 19,620 to 19,650, while finding support around 19,400. Given the current market conditions, the best trading strategy for traders would be to play within this range. This means selling near the resistance levels and buying near the support levels.

Traders should closely monitor the price action and wait for a clear trend breakout before taking larger positions. In terms of technical indicators, both the stochastic and RSI are trading in the overbought zone. This suggests that the index may be due for a correction. Therefore, it would be advisable for investors to book profits in this index, considering the overbought conditions and the uncertain market pattern. To summarize, the index is currently trading within a triangle-shaped pattern on the charts. Traders should sell near the resistance levels and buy near the support levels until a clear trend breakout occurs. Investors are advised to book profits due to the overbought conditions indicated by the stochastic and RSI indicators.

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