Trade setup for Jan 22: NIFTY50 set for a sharp gap up opening on Thursday, can it hold the gains?

NIFTY50

Max call OI:25,500

Max put OI:25,000

(Ten strikes to the ATM, 27 Jan expiry)

The NIFTY50 closed in red after witnessing high volatility in Wednesday’s trading session. The index went below the 25,000 level to touch an intraday low of 24,918 and bounced back from lower levels above 25,200. The global market cues for Thursday remain positive as the US markets closed over 1% on Wednesday, and Asian markets too rejoiced after Japanese bond yields cooled off from higher levels. The GIFT NIFTY futures traded nearly 200 points higher on Thursday morning, indicating a sharp gap-up opening on Thursday.

On the technical front, the NIFTY50 managed to close near the 200 EMA levels, giving the hope for bulls of a bounce back from current levels. Experts believe that a weekly closing above the 200 EMA levels would prove to be a medium-term bottom level for the index.

On the options data front, the 25,000 puts witnessed heavy open interest addition and held the highest open interest, indicating strong support for the coming monthly expiry. On the other hand, 25,500 calls hold the highest open interest, indicating a strong resistance for the expiry.

Stock Scanner

Long buildup: - Eternal

Short buildup: ICICI Bank

Top traded futures contracts: ICICI Bank, HDFC Bank

Top traded options contracts: HDFC Bank 930 CE, Reliance 1420 CE

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