Market outlook: Nifty exhibits bearish trend, adopt 'sell on rise' strategy

Market trading strategy: A suitable stop-loss level for the Nifty50 index could be placed at 22,675, providing a buffer against potential losses

Nifty 50 Index

The Nifty 50 Index, currently trading at 22,419.95, is exhibiting a bearish trend in the near-term, as indicated by chart analysis. For traders seeking to capitalise on this trend, the optimal trading strategy would be "sell on rise."

This strategy entails selling the index when prices experience upward movement, taking advantage of temporary rallies within the overall downward trend. In this case, a suitable stop-loss level could be placed at 22,675, providing a buffer against potential losses if the market unexpectedly reverses direction. Key support levels to monitor include 22,100, 21,950, 21,875, 21,575, and 21,250. These levels represent areas where downward momentum may slow or reverse temporarily, potentially offering opportunities for profit-taking or adjustments to trading positions.

Technical indicators such as the Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD), and near-term Exponential Moving Averages (EMAs) are signaling bearish momentum and expected underperformance. Therefore, selling on rallies or booking profits on index positions aligns with these indicators and the overall bearish outlook.

Nifty Midcap Select

The Nifty Midcap Select Index, currently priced at 10,973.75, is encountering stiff resistance within the range of 11,030 – 11,125. Conversely, a support is anticipated in the range of 10,700 – 10,500. Movements above or below these ranges could potentially catalyze further market momentum, making them critical levels to monitor closely.

Given the technical indicators, which are currently displaying a flat stance for the near term, market participants may need to exercise patience to gain clarity on future price action. During periods of uncertainty, it is often prudent to wait for a breakout before committing to trading positions.

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Disclaimer: Ravi Nathani is an independent technical analyst. Views are his own. He does not hold any positions in the Indices mentioned above and this is not an offer or solicitation for the purchase or sale of any security. It should not be construed as a recommendation to purchase or sell such securities.