Nifty Energy index awaits breakout; Auto looks weak on charts

According to Ravi Nathani, an independent technical analyst, the Nifty Energy index seems trapped in the 26,975 - 27,350 trading range.

Nifty Energy Index Range bound on charts

The Nifty Energy Index, currently trading at 27,062.75, is currently caught in a range-bound pattern on the near-term charts. This situation presents traders with the opportunity to prepare for potential breakout scenarios.

The defined range comprises an upper level at 27,350 and a lower level at 26,975. Such range-bound conditions typically indicate a period of market indecision, where buyers and sellers are in equilibrium. Breakouts from these ranges can lead to significant price movements, which traders should be ready to capitalize on.

In the event of a successful breach above the upper range at 27,350, it could signify a bullish breakout. Traders should be on the lookout for potential resistance levels at 27,564 and 27,725, which could serve as targets for bullish positions. 

Conversely, if the index breaks below the lower range at 26,975, it may suggest a bearish breakout. In such a scenario, traders should consider support levels at 26,525 and 26,136 as potential targets for bearish positions.

However, it's crucial for traders to prioritize risk management in these range-bound market conditions. Price swings can be unpredictable, and all bullish positions should incorporate a strict stop-loss order set at 26,975 on a closing basis. This precautionary measure is essential because a close below this level could trigger panic selling in the index.

In summary, the Nifty Energy Index is currently navigating a range-bound market, which presents both challenges and opportunities. Traders should closely monitor the upper and lower range levels for potential breakout triggers and be prepared to adapt their strategies accordingly.

Nifty Auto Index: Navigating a Bearish Near-Term Outlook

The Nifty Auto Index, with its current trading level at 16,092.20, is painting a bearish picture for the near term. This analysis delves into the prevailing market conditions, identifies crucial support levels, and considers key technical indicators to provide traders with insights into crafting an effective strategy for trading this index and its constituent stocks.

The near-term trend for the Nifty Auto Index is unequivocally bearish, warranting a cautious and disciplined approach. Traders are strongly advised to implement a strict stop-loss at 16,650 to manage risk effectively in this challenging environment.

Given the palpable bearish sentiment, the recommended trading strategy for those dealing with this index and its constituents is to "sell on the rise." This strategy involves selling assets during temporary price upticks. Crucial support levels to watch out for are 15,810, 15,580, and 15,450, which can serve as potential targets for traders adopting the "sell on rise" approach.

Technical indicators, such as the Moving Average Convergence Divergence (MACD) and the Relative Strength Index (RSI), offer valuable insights into market sentiment. Currently, both indicators are pointing downward, signifying a lack of bullish momentum. These signals, combined with other technical parameters, strongly suggest that the Nifty Auto Index is poised for underperformance in the near term.

In conclusion, the Nifty Auto Index is navigating a bearish trend in the near term, making it imperative for traders to exercise caution and prudent risk management.

Employing a "sell on rise" strategy, while closely monitoring key support levels, aligns with the prevailing market conditions. Given the bearish indications from technical indicators like MACD and RSI, traders should remain vigilant.

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