Recently, the index hit its resistance level, which indicated that a minor correction is likely in the near future.
Technical traders are advised to adopt a sell strategy in the near term with a stop loss of 11,850. Hence, this strategy is expected to give best results with expected target at 11,600.
The rationale behind this view is that the index is likely to experience a downtrend, with bearish momentum prevailing in the market, whereas, it is expected to trade within the range of 11,900-11,500 in the near term.
Meanwhile, swing traders are advised to adopt a buy-near-support and sell-near-resistance strategy till a clear breakout is observed on the charts. This strategy is expected to yield profitable results, as the market is likely to experience a range-bound pattern, with volatility within a defined range.
Intraday No Trade Zone: 11,800 – 11,764
Intraday Resistance: 11,805 – 11,836 – 11,881
Intraday Support: 11,745 – 11,720 – 11,650
The charts suggest that the index is exhibiting a range bound pattern with movement taking place within a defined range of 1,777-1,650. Any close above or below this range is likely to trigger a directional movement in the market, indicating a possible change in the prevailing trend.
This range-bound pattern is expected to sustain in the near term as the index is consolidating its position after a sharp correction in the market.
The best trading strategy for the traders in the current market scenario would be to buy on dips as the index is expected to consolidate after a sharp correction.
In case of breach on the upper side of the range, the index is expected to bounce higher, with the rally expected to have a minimum target/resistance around 2,025-2,100.
On the other hand, if the index breaks below the lower limit of the range, the next support is expected around 1,550-1,460 on the daily chart.
In conclusion, the Nifty Media index is currently exhibiting a range bound pattern with volatility being within a defined range. Traders are advised to adopt a buy on dips strategy as the index is expected to consolidate after a sharp correction in the market.
The expected minimum target/resistance in the rally is around 2,025-2,100, while the next support on the daily chart is expected around 1,550-1,460, in case of a breach on the lower side of the range.
Intraday No Trade Zone: 1,745 – 1,730
Intraday resistance: 1,752 – 1,765 – 1,785
Intraday Support: 1,725 – 1,710 – 1,681
(Ravi Nathani is an independent technical analyst. Views expressed are personal).