Nifty IT seen weak on charts, Nifty Auto rangebound: Check trading strategy

Adding to the cautionary signals, the RSI in Nifty IT index has recently broken below the 70 mark, reaching a reading of 66.27, said Ravi Nathani

Nifty IT Index: Navigating a Downtrend with Cautionary Signals

The Nifty IT Index with latest closing of 36,727 is experiencing a near-term downtrend on the charts. Traders should take note of anticipated support levels around 35,850 and 35,100.

In this scenario, the recommended trading strategy is to "sell on rise," with a vigilant eye on potential upward movements and a strict stoploss set at 38,000.

Adding to the cautionary signals, the RSI has recently broken below the 70 mark, reaching a reading of 66.27. This downturn in RSI suggests a potential shift in momentum and underscores the bearish sentiment in the near term.

Additionally, the Bollinger Bands, with a 20-day simple moving average (SMA) at 35350, provide another technical indicator signaling potential downside.

This further supports the notion of a cautious stance, especially for traders considering short-term strategies.

In conclusion, traders are advised to approach the Nifty IT Index with caution, leveraging the downtrend by selling on upward movements.

The specified support levels, RSI readings, and Bollinger Bands offer valuable insights for informed decision-making, allowing traders to navigate the market dynamics with a strategic approach.

Nifty Auto Index: Charting Opportunities within Defined Boundaries

The Nifty Auto Index with latest close of 18,713 is exhibiting a range-bound pattern within 18,920 and 18,620 on the charts.

A decisive close above or below this range is poised to act as a trigger, providing directional cues for traders.

A close above 18,920 could signal the potential for the next resistance at 19,125, while a close below 18,620 may indicate support levels at 18,425 and a crucial anchor at 18,200 for bullish positions.

Adding to the technical insights, the 14-day RSI recently touched 68, just below the 70 mark, suggesting a moderate level of overbought conditions.

The Stochastic indicator is positioned at 86/89, further reinforcing the potential for a sell-off. Given the outlined conditions, the recommended trading strategy is to "sell on rise."

Traders are advised to remain cautious, leveraging the defined boundaries to capitalize on potential price movements within the index.

The specified support and resistance levels, along with the RSI and Stochastic indicators, offer valuable reference points for informed decision-making in the current market scenario.

Disclaimer: Ravi Nathani is an independent technical analyst. 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.