Charts show range bound trend for Nifty IT in near-term, adopt sell-on-rise

Given the current market conditions, the best trading strategy for traders would be to buy the Nifty IT Index near the support levels and sell it near the resistance levels, said the technical analyst

Nifty Private Bank
Last close: 21,932.55

The resistance levels between 22,070-22,100 signify a level where upward price momentum may weaken, leading to a correction in the near term. The sharp rally has pushed the index into an overbought zone, indicating a high possibility of a correction.

Technical indicators like RSI, MACD, and Stochastic support this claim, showing that the index is likely to experience a price-wise correction.

Support levels on the charts around 21,725-21,550-21,225 suggest that the index will likely find some support around these levels, possibly leading to a price reversal.

In order to capitalise on this situation, traders are advised to sell on a rise with a strict stop loss of 22,100 on a closing basis.

This trading strategy will enable traders to profit from the expected price-wise correction, while limiting their losses.

Nifty IT
Last close: 28,025
 

In the current market scenario, charts suggest that the short-term trend is likely to be sideways. Charts signal that the index will likely be range-bound between 26,250-28,300. A break above or below this range is likely to act as a trigger for the next direction of the trend.

If the index breaches the higher range, the next resistance level on the charts is expected to be at 29,525-30,425. Conversely, if it violates the lower range, the next support level on the charts would be at 25,700-25,000.

Given the current market conditions, the best trading strategy for traders would be to buy the Nifty IT Index near the support levels and sell it near the resistance levels, until a clear trend is observed on the charts.

This, therefore, would allow traders to take advantage of the range-bound market and generate profits from price fluctuations.

Nifty PSU Bank
Last close: 4,184.1
 

Charts suggest that the index is expected to encounter resistance around levels of 4,275-4,300. On the other hand, the index is also expected to find support on the charts around 4,080-3,980.

The best trading strategy for traders in this scenario would be to sell near the resistance levels and book profits. Once a correction takes place, the best price to accumulate would be at the support levels mentioned above. This approach allows traders to capitalise on short-term market movements, while minimising their risk exposure.

By selling near the resistance levels and booking profits, traders can benefit from a potential price reversal while ensuring that they lock in gains made during the current upswing.

Additionally, waiting for the correction and accumulating at the support levels allows traders to enter the market at a more favorable price point.

Overall, this trading strategy is well-suited for short-term traders who are seeking to take advantage of market movements in the Nifty PSU Bank index. 

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