Trade setup for July 20: Can NIFTY50 reclaim 200 EMA?

Indian markets will start the week on a negative note after gaining over 0.5% in the previous week amid weak global market cues.GIFT NIFTY futures were trading 51 points lower at 8:00 am on Monday morning, suggesting a negative opening for the NIFTY50. Elevated crude oil prices will continue to remain a key sentiment driver for Indian markets this week.

Brent crude oil prices crossed $90 per barrel on Monday morning as the situation becomes increasingly volatile in the Middle East. Iran declared last week that the ceasefire has effectively collapsed. Furthermore, Iran also attacked four vessels passing through the Strait of Hormuz, aggravating oil supply worries.

The US stock futures indicate a flat start for US markets on Monday after a fall in the previous week. The NASDAQ 100 fell over 4.3%, amid a sharp selloff in tech stocks. The S&P 500 and Dow Jones fell 1.5% and 0.9%, respectively, in the previous week.

Asian Markets opened in the red on Monday as Korean and Japanese stocks extended the previous week’s fall. The Korean KOSPI fell over 3% to a 2-month lows, falling over 3%, and the Japanese Nikkei also tumbled over 4%. Meanwhile, Hong Kong’s Hang Seng remained an outlier, surging over 2.3% on Monday morning, as investors preferred diversified bets.

Chart check

The NIFTY50 rose 0.5% last week, recouping most of the losses from the previous week. On the hourly chart, the index witnessed the positive crossover of 20 EMA crossing 50 EMA, boosting the positive momentum. Additionally, the index saw buying strength throughout Friday’s intraday session, making a higher-highs and higher-lows formation.

On the daily charts, the NIFTY50 defended the 20 EMA levels throughout last week and finally closed above the crucial resistance zone of 24,200-24,250. The bullish momentum could gather more steam if the index manages to close above the 200-day EMA level of 24,427 in the coming week.

NIFTY50 open interest analysis

The coming weekly expiry data indicates strong open interest build up on the downside, indicating a strong strength and support near 24,000 to 24,200 levels. The 24,000 puts hold the highest open interest, suggesting a strong support level for tomorrow’s expiry. On the upside, 25,000 calls hold the highest open interest, suggesting a strong resistance.