Nifty Pharma, Auto: Here's a guide to plan your trading activity

According to Ravi Nathani, an independent technical analyst, the Nifty Pharma and Auto indices are at critical junctures, hence one needs to watch out for these key levels for planing trades.

Nifty Pharma: Navigating Resistance and Divergence

The Nifty Pharma Index, currently at 15,448.95, has traders and investors on their toes as it approaches a critical juncture. On the charts, a substantial barrier is looming between 15,580 and 15,664. This range is no ordinary obstacle; it's a zone of stiff resistance. While the near-term trend leans towards bullish territory, there's an important caveat to consider.

Here's the twist: 

The index might be displaying bullish tendencies, but technical indicators like MACD and RSI tell a different story. They reveal a concerning divergence. When such disparities emerge, it's often a signal to tread cautiously. 

 

So, what's the optimal trading strategy in this scenario? 

Traders are cautiously advised to consider booking profits on upward price movements, especially within the resistance range mentioned earlier. Prudence calls for implementing a stop-loss at 15,750, which should trigger on a closing basis.

However, here's the threshold to watch carefully: 

If the index closes below 15,280, it could mark a pivotal shift in market sentiment. This level might serve as not only a strict stop-loss but also a turning point from bullish to bearish.

In conclusion, the Nifty Pharma Index presents an intriguing landscape, characterized by resistance, divergence in technical indicators, and potential levels of support and stop-loss. As always, risk management and vigilance are vital when navigating such complex scenarios in the world of trading and investing.

Nifty Auto Index: Navigating Support and Resistance

The Nifty Auto Index, currently standing at 15,995.95, has recently experienced a sharp rally followed by a pullback. Now, it's perched precariously close to a key support level at 15,900. The significance of this juncture cannot be overstated. 

Here's the scenario: 

If the index closes below 15,900, it could signal the onset of bearish sentiments in the near term. In such a case, traders might want to brace for a bumpy ride. The subsequent support levels to watch out for would be at 15,620 and 15,400.

But here's the pivot point: 

A short-term trend reversal, signaling a shift from bullish to bearish, would only manifest if the index closes below 15,264. This is the line in the sand that traders should monitor closely.

So, what's the best trading strategy in the current landscape? 

Prudence dictates a watchful stance. Keep a keen eye on the index's behavior. If it breaks below 15,900, anticipate a bearish bias with support levels at 15,600 and 15,400. On the flip side, if it stages a rally, expect formidable resistance around 16,450. This might be the opportune moment to start booking profits for the near term.

In summary, the Nifty Auto Index is navigating a crucial phase, with support and resistance levels dictating its trajectory. Trading in such conditions requires vigilance and adaptability, always keeping a close watch on critical price levels.

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