Charts show Nifty Commodities in overbought zone; sell-on-rise strategy apt

The recent bullish run has propelled Nifty Commodities into an overbought zone, implying optimal trading strategy to capitalise on any upward price movements by selling, said technical analyst

Nifty Energy
Last close: 24,316.5
 

After analysing the Nifty Energy index, it can be inferred that the trend on the charts is bullish. However, the sharp rally in the past fortnight has brought the index close to its resistance area at 24,575. In the event of a close above this level, the index could move toward 25,300.

The recommended trading strategy for bullish traders would be to monitor the index's performance closely and observe if it closes above 24,575. In such a scenario, bullish opportunities in the index could be explored, and a stop-loss limit should be placed below 24000 on a closing basis. However, if the index closes below 24000 on any day, the next support level is expected to be at 234,50 and 22,725.

Hence, traders are advised to book profits and wait for a correction to complete in this scenario.

In conclusion, traders looking to invest in the index should closely monitor the index's performance and look for bullish opportunities if it closes above the resistance level of 24,575. A stop-loss limit should be set at 24,000, and traders should be prepared for a correction in the event of a close below this level.

Overall, it is crucial to keep a watchful eye on the market trends and make informed trading decisions to optimise gains and minimise potential losses.

Nifty Commodities
Last close: 5,877.8

The recent bullish run in the near term has propelled the index into an overbought zone, implying that the optimal trading strategy for traders would be to capitalise on any upward price movements by selling.

It is advisable that traders and investors divest from this index and its constituents, placing a stringent stop loss of range between 5,925 - 5,975 on a closing basis.

The minimum target for this sell trade would be 5,700, followed by 5,575. Conversely, if the index were to close above the range of 5,925 - 5,975, the next resistance level would be positioned directly around 6,225.

Thus, swing traders are advised to keep a close eye on these levels.

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