Charts suggest downside for Nifty PSU Bank, Fin Svcs; here's how to trade

Nifty Financial Services Index

The Nifty Financial Services Index is currently experiencing a downward trend in the near term. Despite this decline, the overall trend remains bullish, suggesting that the current downtrend should be seen as a temporary pullback within a larger uptrend. This perspective is critical for traders and investors to maintain a strategic approach.

The key support levels to monitor are 22,336 and 22,200. These levels are crucial as they provide a potential entry point for traders and investors looking to capitalize on the expected rebound. The best strategy, therefore, is to buy the index and its constituents near these support levels.

 

This approach allows for taking advantage of the anticipated stabilization and subsequent upward momentum of the index. As the index nears these support levels, it is advisable to prepare for potential buying opportunities to maximize gains when the index resumes its bullish trend.

Nifty PSU Banks Index

The Nifty PSU Banks Index is also showing a downward trend in the near term, with significant support expected at the 6,600 level. If the index trades below this support, it could provide an excellent opportunity for swing traders to accumulate the index and its constituents.

The overall mid-term trend indicates that the index is trading within a range of 6,500 to 7,600. A breakout above or below this range will trigger a significant move in the corresponding direction. Until a clear breakout occurs, the best strategy is to wait and observe. Risk-tolerant traders might consider buying near the support level and selling near the resistance.

This approach allows for taking advantage of the range-bound movement while managing risk effectively. For conservative traders, waiting for a breakout to confirm the direction of the trend before making significant moves is advisable.

Nifty Private Banks Index

For the Nifty Private Banks Index, a critical support level to monitor is 24,900. A close below this level could trigger another round of selling, with the next support level identified at 24,300. The best trading strategy is to closely observe the index's behavior around the 24,900 support level.

Risk-tolerant traders might buy on dips with a strict stop-loss set at 24,900. This strategy allows for taking advantage of potential rebounds while minimizing risk. For more conservative traders, it is advisable to wait for a few days to see if the index holds above 24,900.

If the index closes below this level, it is prudent to wait for the correction to complete and then start buying near the 24,300 support level. This level is likely to attract bullish activity, given the overall bullish pattern on the charts. This approach helps in making well-timed entries that can yield significant returns when the index resumes its upward trend.

(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.)