Trade setup for Aug 10: Can NIFTY50 breakout of the consolidation range on Monday?

NIFTY50 is expected to start the week on a positive note amid the positive global market cues. The GIFT NIFTY futures traded over 40 points higher at 8:00 am, tracking gains in the Asian markets.

Meanwhile, crude oil prices remain elevated near $85 per barrel on Monday morning, as uncertainty lingers over the US and Iran peace deal and the reopening of the Strait of Hormuz.

The Asian markets opened in the green on Monday morning, tracking the overnight gains in tech stocks in the US on Friday. The Japanese indices soared 2%, the most amongst Asian peers. While Hong Kong and Korean indices traded with marginal gains as investors continue to assess the risks of overheating in chip stock valuations.

The US stock markets closed the previous week with strong gains, soaring as much as 5% on the NASDAQ 100 index. While the Dow Jones and the S&P500 soared by little over 3%. The sharp rise in non-farm payrolls data posted an increase of 23,000 from the previous month, abating the fears of a near-term rate hike by the Federal Reserve.

NIFTY50 chart summary

The benchmark index closed the previous week with marginal gains on Friday. On the weekly charts, the index made a doji candlestick pattern, suggesting indecision on the direction of the index. Similarly, the index made a shooting star candlestick pattern on the daily charts, indicating a reversal from the current trend. However, the reversal can be confirmed if the index manages to close below the previous day’s low.

Meanwhile, the broader trend remains range-bound, with major support at the 200 EMA level at 24,400 and resistance at 24,775, which is the recent swing high level.

NIFTY50 open interest summary

The open interest data on Friday indicates strong open interest buildup on the upside, indicating strong resistance at regular intervals above 24,600. Meanwhile, 24,000 puts hold the highest open interest on the downside, indicating strong support for NIFTY50. However, the second-highest open interest on the downside remains at 24,500, acting as immediate support. On the flipside, 25,000 calls hold the highest open interest, indicating strong resistance.