Prudent Trading in Nifty Metal: Booking Profits Amid Overbought Signals
The current market price for the Nifty Metal Index is 7,373 and the near-term trend is upward. However, technical indicators like RSI and Stochastic are signaling that the index is trading in the overbought zone.
Anticipated resistance on charts is around 7,675. For traders, the recommended strategy is to book profits and consider reducing bullish positions.
This cautious approach is based on the expectation that the index might either consolidate or undergo a near-term pullback. Support levels are projected to be around 7,064, 6,936, and 6,800.
For conservative traders, it is advisable to wait for the index to reach these support levels before initiating fresh bullish positions.
Given that these support levels might take some time to materialize, traders are advised to book profits at the current market price or on upward movements, stay in cash, and patiently wait for a potential pullback.
Once the index reaches the mentioned support levels, traders can consider these as optimal buying opportunities for swing trading. This strategy allows traders to navigate the market with caution, taking advantage of potential pullbacks while managing risks associated with the current overbought conditions.
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Nifty Pharma Index: Navigating Consolidation
The Nifty Pharma Index is currently priced at 16,169 and is exhibiting a consolidation pattern at higher levels, accompanied by a negative bias.
This suggests that the index might be gearing up for a minor correction, often referred to as a pullback within an overall uptrend. The consolidation range for this index is identified as lying between 16,470 and 16,030.
A decisive close above or below this range will serve as a trigger, indicating the potential direction for the market. The prevailing expectation for the near term is that the index is likely to break towards the lower range of the consolidation, specifically below 16,030 on a closing basis.
If this occurs, the anticipated support levels would be around 15,736, 15,680, 15,464, and 15,250. Given this scenario, the recommended trading strategy is to book profits and adopt a cash position for a while.
This cautious approach aligns with the anticipation of a potential downward movement in the index. Traders are advised to wait until the mentioned support levels are reached before considering fresh buying opportunities.
This strategy allows traders to navigate the market effectively, taking advantage of potential pullbacks while managing the risks associated with the current consolidation and negative bias.
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.