Trade setup: Can NIFTY50 reclaim 24,000 on Wednesday?

The US stock markets reached new record highs on Tuesday, following the holiday on Monday. Investors reassessed the situation in West Asia and remained cautiously optimistic on the US-Iran deal. The Dow Jones slipped 0.2%, while the NASDAQ and the S&P 500 closed 0.6% and 1.2% higher, lifted by a rally in tech stocks.

Crude oil prices stabilised near $95 per barrel on Wednesday morning, as uncertainty prevails in the Middle East on the peace deal between the US and Iran. US Secretary of State Marco Rubio said the deal would take several days to complete, with unresolved issues including Iran’s frozen assets.

Asian markets cheered the rally in the US tech stocks and opened higher on Wednesday morning. Japan’s Nikkei hit a fresh record high, rallying over 1%, and Korea’s Kospi also traded over 3% higher as SK Hynix’s market capitalisation surged above $1 trillion.

GIFT NIFTY futures traded 31 points lower on Wednesday morning, indicating a muted opening for NIFTY50 as the index aims to reclaim the 24,000 levels. Steady crude oil prices, Treasury yields, and the dollar index could act as a sentiment booster in Wednesday’s trading session.

NIFTY50

The NIFTY50 closed in the red by giving up partial gains of Monday. The index witnessed expiry day volatility and failed to hold the crucial psychological support level of 24,000 on Tuesday. Additionally, the index also failed to defend the 50-day EMA, invalidating the bullish momentum structure. The current trade setup on the daily chart indicates 20-EMA level near 23,850 as the crucial support and 24,100 as the crucial resistance for the index this week.

NIFTY OI analysis

The initial open interest buildup for the 2nd June expiry suggests that the 24,000 level may act as a crucial and strong resistance zone for the index, with the highest open interest on the call side of the strike price. Similarly, on the flipside, the 23,000 puts hold the highest open interest, indicating a strong resistance for the NIFTY50. Before 23,000, the 24,000 puts, 23,500 puts hold strong open interest concentration, indicating downside protection at different levels.