Nifty Energy, Pharma: In a downtrend; look to sell on rally, hint charts

According to Ravi Nathani, an independent technical analyst, the Nifty Energy index can be sold with a stop at 40,320.

Nifty Energy Index

The Nifty Energy Index, currently priced at 39,530.35, is experiencing a downward trend in the near term, according to chart analysis. In light of this trend, the optimal trading strategy would be to sell on rallies, with caution exercised at resistance levels.

A strict stop-loss above 40,320 on a closing basis should be implemented to manage risk effectively. Support levels on the charts are anticipated around 38,800 and 38,000. These levels serve as potential targets for traders looking to capitalize on downward movements in the index.

The Relative Strength Index (RSI), a key technical indicator, is signaling a downtrend, further supporting the bearish sentiment. Considering these factors, traders may consider initiating short positions either at the current market price (CMP) or on upward price movements.

Selling on rallies aligns with the prevailing market conditions and technical signals, maximizing the potential for profitable trades in the near term. However, traders should remain vigilant and monitor price action closely to adjust their strategies as needed in response to changing market dynamics.

Nifty Pharma Index

The Nifty Pharma Index, currently priced at 19,125.20, is exhibiting a downward trend in the near term, as indicated by chart analysis.

In light of this trend, the most prudent trading strategy would be to initiate selling positions on upward price movements, preferably at resistance levels. A strict stop-loss above 19,336 on a closing basis is advisable to mitigate risks effectively.

This precautionary measure helps traders manage potential losses in case the market moves against their positions. Support levels on the charts are anticipated around 19000 and 18700. These levels serve as potential targets for traders aiming to profit from downward movements in the index.

The Moving Average Convergence Divergence (MACD), a crucial technical indicator, is indicating a downtrend. This reinforces the bearish sentiment prevailing in the market.

Given these indications, selling either at the current market price (CMP) or on rallies aligns with the prevailing market conditions and technical signals. 
 

Underperformance is anticipated in the near term, further supporting the rationale behind the selling strategy. Traders should exercise caution and closely monitor price movements to identify favorable selling opportunities. By adhering to this strategy, traders can optimize their chances of capitalizing on potential downward movements in the Nifty Pharma Index while effectively managing risks.

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