Bias for Nifty has turned bullish, look to buy on dips: Ravi Nathani

According to the technical analyst, the near-term trend for the Nifty has turned from rangebound to bullish as the index broke and closed above a previously identified resistance level on the charts.

Nifty 50
Last close: 18,165.35

Yesterday's market sentiment was bullish, as indicated by the positive performance of various sectors. The Metal sector had particularly strong gains, rising by 1.65 per cent. Additionally, the Financial Services sector, along with Banks, IT, Pharma, and FMCG, also performed well in the market, each rising between 0.40 - 0.80 per cent.

This strong performance in these sectors led to the Nifty Index closing with a gain of 0.50 per cent. This indicates that the overall market sentiment was bullish, and the prices of most securities have risen.

On the technical front, the index broke and closed above a previously identified resistance level on the charts, which is considered a bullish signal.

This suggests that buyers are in control and the prices are likely to rise in the near term. Additionally, this also implies that the pattern of the index has shifted from range bound to bullish.

Given this scenario, the best trading strategy would be to buy on dips. This approach involves purchasing at lower levels, when the prices are temporarily pulled back, with the expectation that prices will rise again in the near future.

The target for this strategy is 18,450 and 18,650, which are likely to be the resistance levels for the index in the near term.

Levels for intraday are as follows:

Intraday No Trade Zone: 18,130 - 18,204

Expected Intraday Resistance Levels: 18,225 – 18,270 – 18,420 

Expected Intraday Support Levels: 18,105 – 18,075 – 17,975 – 17,825

Nifty Energy Index
Last close: 26,272.55

The Nifty Energy Index has closed with an inside bar on charts on Wednesday, following a breakout.

An inside bar is a pattern where the current day's candle is completely within the range of the previous day's candle, also known as the "mother candle." This pattern indicates that the high and low of the mother candle will serve as key levels for determining the direction of the trend in the near term.

Specifically, a breakout above the high of the mother candle (26,370) would confirm a bullish trend, while a breakdown below the low of the mother candle (26,080) would signal a bearish trend.

The overall trend on the charts is bullish, as evidenced by the recent breakout and the positive performance of various sectors. Additionally, the target for this bullish trend is 26,900, which is likely to be the resistance level for the index in the near term.

Given the bullish trend and the target price, the best trading strategy for traders would be to buy the index and its constituents at dips. This strategy involves buying at lower levels, when the prices are temporarily pulled back, with the expectation that the prices will rise again in the near future.

The target for this strategy is the aforementioned 26900, which traders should use as a guide for when to exit their positions.

Intraday No Trade Zone: 26,230 – 26,310

Expected Intraday Resistance Levels: 26,349 – 26,436 - 26,564

Expected Intraday Support Levels: 26,175 – 26,100 – 26,000  

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