Should investors sell Nifty Auto, Energy on rise? Here's what charts reveal

Nifty Auto Index Technical Analysis

The Nifty Auto index is currently exhibiting a range-bound trend on the charts, confined within the levels of 25,460 and 24,560. This suggests that the best trading strategy in the near term is to sell when the index approaches the upper resistance level and to buy when it nears the lower support level.

Should the index break above the upper range of 25,460, the next resistance level to watch is 25,650. Conversely, if the index falls below the lower range of 24,560, the subsequent support level would be 24,250.

Given that the index is trading close to its higher resistance level of 25,460, the prudent approach would be to consider short selling or booking profits at this juncture. The rationale behind this strategy is that the index is more likely to face selling pressure near the upper boundary of its range, leading to a potential pullback.

 

Technical indicators and the current chart pattern support the view of short-term selling pressure. Traders and investors should remain cautious and look for signs of reversal at these key levels. Selling near the resistance allows traders to capitalize on the anticipated downward movement while managing risk effectively.

In summary, the Nifty Auto Index is range-bound with defined levels of 25,460 and 24,560. The recommended strategy is to sell near resistance and buy near support. Watch closely for any breakouts, as a move above 25,460 could lead to resistance at 25,650, while a break below 24,560 would find support at 24,250. With the index near its higher resistance, short selling or booking profits is advisable.

The Nifty Energy Index

The Nifty Energy index is currently exhibiting a downtrend in the near term. With a stoploss set at 42,200 on a closing basis, the best trading strategy is to sell the index, targeting levels of 41,150 and 40,800. The technical indicators and chart patterns support this bearish outlook, indicating that further downside is likely.

It's important to monitor the 40,500 level closely. A trade below this level would present an excellent opportunity for swing traders to accumulate the index. Such a move could lead to a quick pullback, offering smart returns.

The rationale behind this strategy is that a break below 40,500 would likely trigger short-term buying interest, driving a rebound in the index.

In summary, the Nifty Energy Index's near-term trend is downward, with critical support levels at 41,150 and 40,800. Traders should maintain a stoploss at 42,200 and look for opportunities to sell at current levels.

Additionally, a break below 40,500 would provide a favorable entry point for swing traders aiming for a quick pullback and potential gains. This approach allows traders to capitalize on the anticipated movements while managing risk effectively.

(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.)