Trade setup: Can NIFTY50 bounce back above 23,000 on Wednesday? GIFT NIFTY indicates positive start

GIFT NIFTY futures surged 82 points on Wednesday morning, indicating a gap-up open for NIFTY50. Steady crude oil prices and elevated treasury yields could temper sentiment for investors.

Brent crude oil futures hovered near the $110 per barrel mark on Wednesday morning, as investors assessed mixed reports on diplomatic progress between the US and Iran. Crude oil prices have surged over 10% this month amid renewed tensions in the region after Houthi rebels struck Saudi Arabia.

The US markets closed mixed on Wednesday as tech stocks continued to remain under pressure amid a selloff in AI-related stocks. The Dow Jones surged over 500 points as investors chose defensive stocks over tech stocks. NASDAQ 100 closed on a muted note, led by pessimism over tech stocks.

The Asian benchmark indices surged across the board on Wednesday morning, amid bargain hunting in the tech stocks after the recent fall. The Korean KOSPI surged 4.5%, while Japan’s Nikkei and Hong Kong’s Hang Seng surged as much as 1.5%.

NIFTY50 chart check

The NIFTY50 scaled back a few points on Monday, after a sharp bounce back in the previous week. On the hourly charts, the index fell below 20 EMA, but defended 50 EMA, indicating resumption of range-bound trade. On daily charts, the NIFTY50 faced strong resistance at 23,200 levels and fell below the daily 20 EMA levels. In addition, the index also failed to defend the psychological resistance of 23,000 on the daily charts, suggesting an absence of follow-up buying at the higher levels.

Going forward, 22,700 remains a crucial support, and 23,200 is the near-term resistance. A breakout from this range would help decide the direction for the index.

NIFTY50 open interest summary

The initial buildup for NIFTY50’s upcoming monthly expiry on October 27 indicates a range-bound trade of 22,500 to 23,000. The 23,000 calls held the highest open interest, indicating strong resistance. On the other hand, the 22,500 puts held the highest open interest, indicating strong support on the downside.