Nifty Auto, Energy bearish on charts; check key levels and trading strategy

Nifty Auto Index

The Nifty Auto Index is currently showing a bearish trend in the near term, indicating potential downside risks. Traders should closely monitor the 25600 level, as a trade and close below this mark could trigger a significant sell-off in the index and its constituents. A break below this level would signal increased selling pressure, leading to further declines. The first key support levels to watch are 24750, 24350, and 23825.

These levels may act as potential zones where the index could find temporary support during its decline. However, traders are advised to maintain a bearish outlook until clear signs of stabilisation emerge.

The best trading strategy under the current market conditions would be to sell on rises, particularly when the index approaches key resistance levels. A strict stop-loss of 26300 on a closing basis should be implemented to manage risk effectively. This stop-loss will help protect against sudden upward reversals that could invalidate the bearish setup.

By adhering to a disciplined sell-on-rise strategy with a stop-loss in place, traders can capitalize on the downward trend while managing risk in the volatile market environment.

Nifty Energy Index

The Nifty Energy Index is showing a bearish trend in the near term, as indicated by multiple technical indicators such as RSI, MACD, and Stochastic, which all suggest further downside movement. This points to potential underperformance in the market, making it an unfavorable period for long positions.

The best trading strategy under these conditions is to sell the index and its constituents, either at the current market price (CMP) or on any rise. The target support levels on the charts are expected at 41775 and 41200, where the index may find temporary support during its decline.

To manage risk effectively, traders should apply a strict stop-loss at 42800 on a closing basis. This stop-loss will protect against any unexpected upward reversal that could challenge the bearish outlook. Overall, selling on the rise with a defined stop-loss is the recommended strategy in this bearish phase, allowing traders to take advantage of the downward momentum while managing risk.

(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.)