Trade setup for Aug 25: Can NIFTY50 breakout of consolidation on Tuesday? 24,400 remains key level to watchout for

The benchmark NIFTY50 index is expected to open on a negative note, as indicated by the GIFT NIFTY. The elevated crude oil prices and the volatility in the US treasury yields is expected to remain a key sentiment driver for the index on Tuesday.

The US stock markets closed mixed on Monday as the Dow Jones extended its gains from Friday to close over 200 points higher. Meanwhile the tech-heavy NASDAQ 100 and the S&P 500 closed 0.2% and 1% lower on Monday, pulled by tech stocks. NVIDIA shares closed almost 3% lower on Monday, ahead of its quarterly earnings on Wednesday.

Meanwhile the Asian markets extended their fall on Tuesday morning as benchmark indices in Korea, Hong Kong and China fell as much as 1.5%. The shares in Japan hovered near the flat lines on Tuesday morning, trading with over 30 points gain.

The crude oil prices continued to hover above $91 per barrel, followed by a 3% drop on Monday. The US Treasury secretary vowed to unleash strong economic sanctions against Iran and also punish countries that help Iran economically.

NIFTY50 chart summary

NIFTY50 continues to trade in a tight range of 24,000 to 24,400. On the daily charts, the index defended the 50 EMA on Monday, despite a sharp drop from the intraday high levels. A sustained closing above the major resistance level of 24,400 or below the crucial support of 24,000 would determine the next direction for the index.

Meanwhile, in the short term, the index managed to defend the hourly 20 EMA levels, but continued to close below the hourly 50 EMA levels.

NIFTY50 open interest summary

The open interest data for today's expiry indicates a strong resistance level of 24,300, with the highest open interest on the call side. On the flipside, the 24,000 puts holds the highest open interest, indicating a strong support on the downside.