Nifty50, Bank Nifty: Sell on rise trading strategy ideal; check key levels

It's imperative to acknowledge the negative divergence indicated by the RSI, suggesting a cautious stance on Nifty50, says Ravi Nathani

Nifty 50 Analysis: Balancing Bullish Signals with Cautionary Indicators

The Nifty 50 Index, currently at a CMP of 21,895, presents an intriguing scenario as price action signals bullish tendencies while the RSI indicator reflects a negative bias on the charts.

A crucial resistance zone between 21,936 and 21,981 is anticipated, potentially marking a near-term high for the coming week.

A breakthrough and sustained close above this range could propel the index to the next resistance levels at 22,080 and 22,300.

However, it's imperative to acknowledge the negative divergence indicated by the RSI, suggesting a cautious stance.

In the event of a correction, breaking the range of 21,700 to 21,680 could initiate a downward trajectory.

The first support levels expected are around 21,464, 21,350, and 21,150. A critical point to note is that a breach below 21,450 could signify a trend reversal from bullish to bearish in the near term.

Considering this analysis, a prudent trading strategy for investors involves seeking opportunities to sell the index and its constituents on upward movements.

Traders should remain vigilant, particularly if the index approaches the resistance zone, and closely monitor the crucial support level at 21,450.

Breaking this level may trigger a significant sell-off, emphasizing the importance of adaptability and strategic decision-making in the dynamic landscape of the Nifty 50 Index.

Navigating Bearish Signals: Bank Nifty Index Analysis

The Bank Nifty Index, currently trading at a CMP of 47,710, is exhibiting a near-term downtrend on the charts, prompting a cautious stance for market participants.

To counter potential panic selling, a critical level to watch is 47,000, as a close below this mark could intensify selling pressure.

The expected support zones lie around 46,150, 45,400 and 44,600, presenting crucial markers for traders.

Technical indicators align with the bearish sentiment, reinforcing the possibility of a downward phase in the near term.

For traders adopting a bearish strategy, a stoploss should be considered at the new high of 48,636.

However, this stoploss trigger would be conditional on the index closing above this level for more than two consecutive days, as the chart pattern suggests a consolidation phase in the short term with a negative bias.

In light of these observations, the most prudent trading strategy would be to "sell on rise."

Traders are advised to stay vigilant, book profits, and consider holding cash positions, aligning their strategies with the prevailing bearish signals.

The cautious approach and readiness to adapt to emerging market conditions are crucial for navigating the complexities of the Bank Nifty Index in the current 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.