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

Nifty Auto Index

The Nifty Auto Index demonstrates a bullish trend on the charts in the near term. Despite this upward movement, the index has recently closed near its resistance levels, indicating a potential pause or reversal in its current rally. For the upcoming week, resistance levels are anticipated at 26,900 and 27,250. Given the proximity to these resistance points, it is prudent for traders to consider booking profits on any further rises. This approach helps lock in gains before the index potentially encounters selling pressure at these key resistance levels.

Support levels for the week are projected around 25,800 and 25,500. Given that the technical indicators are currently overbought, a pullback could be on the horizon. Traders and investors are advised to wait for the index to retreat to these support levels before initiating fresh investments. This strategy not only minimises risk but also enhances the potential for higher returns by entering at a more favorable price point after a pullback.

Nifty Energy Index

The Nifty Energy Index also exhibits a bullish trend on the charts in the near term. However, maintaining a strict stop-loss is essential for all bullish positions. Specifically, traders should set a stop-loss at 43,650, as a close below this level would trigger a stop-loss for all bullish positions and signal a negative breakdown on the charts. Such a breakdown could lead to increased selling pressure, with the next support levels found at 42,400 and 41,600. Being aware of these support levels allows traders to prepare for potential declines and plan their entry points accordingly.

Resistance levels for the Nifty Energy Index are anticipated at 44,500 and 44,900. Given the overall bullish trend, traders should use any rise towards these resistance levels as an opportunity to book profits. By doing so, they can capitalise on the gains made during the current upward trend and protect their investments from any sudden market reversals.

In conclusion, both the Nifty Auto and Nifty Energy Indices are currently exhibiting bullish trends. However, due to the proximity of key resistance levels and overbought technical indicators, traders should consider booking profits on any rises and wait for pullbacks before making fresh investments. For the Nifty Auto Index, watch for resistance at 26,900 and 27,250, and support at 25,800 and 25,500. For the Nifty Energy Index, set a stop-loss at 43,650, and watch for resistance at 44,500 and 44,900, and support at 42,400 and 41,600. Adopting these strategies will help manage risk and optimise returns in the current market conditions.

(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.)