Is it a good time to sell Nifty 50, MidCap Select index? What charts say

NIFTY 50 Index Analysis:

The NIFTY 50 Index is currently trading at 23,290.15. Although the overall trend remains bullish, recent volatility has disrupted the near-term pattern, evidenced by large candlestick formations. 

This volatility suggests that the index is likely to trade within a wide range in the near term, making it advisable for traders to adopt a strategy of selling near resistance levels and buying near support levels.

If the index breaks and closes above the stiff resistance at 23,340, the next resistance levels to watch are 23,850 and 24,600. Conversely, if the index closes below 23,100, the expected support levels would be 22,900, 22,550, 22,300, and 22,050.

Given the sharp rally from last week's lows, the best trading strategy would be to look for opportunities to go short on the index and its constituents at resistance levels. This approach is supported by technical indicators such as RSI, Stochastic, and MACD, which are currently trading close to overbought levels. These indicators suggest that the index may face selling pressure, making short positions more attractive at higher resistance points.

In summary, despite the bullish overall trend, the recent volatility in the NIFTY 50 Index necessitates a cautious trading approach in the near term. Traders should sell near resistance and buy near support levels, keeping an eye on the key levels of 23,340 (resistance) and 23,100 (support) for potential breakouts. 

This strategy, backed by overbought signals from RSI, Stochastic, and MACD, aims to capitalise on the expected trading range and manage risk effectively.

NIFTY MIDCAP SELECT Index Analysis:

The NIFTY MIDCAP SELECT Index is currently trading at 11,756.25. The index is facing stiff resistance at 11,785, which marks its previous lifetime high. A close above this level would signify a breakout on the charts, with the next resistance anticipated at 12,125. 

Given that the index is trading near the overbought zone, the best trading strategy would be to sell on rise.

Technical indicators suggest caution as the index approaches overbought conditions, which typically attract selling pressure. Therefore, it is advisable to book profits or initiate short positions as the index rises towards the resistance level of 11,785. On the downside, the support levels on the charts are expected at 11,500, 11,250, and 11,100.

In summary, while a close above 11,785 could lead to a bullish breakout targeting 12,125, the prudent strategy for now is to sell on rise due to the overbought indicators. 

Traders should monitor the resistance and support levels closely, using the levels of 11,785 as a trigger for potential upside and the levels of 11,500, 11,250, and 11,100 as key supports to manage risk and potential pullbacks effectively.

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Disclaimer: Ravi Nathani is an independent technical analyst. Views are his own. 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.