Trade setup for July 23: Can NIFTY50 bounce back above 24,000 on Thursday?

Brent crude prices rose for the fifth straight session on Thursday morning as geopolitical tensions intensified between the US and Iran. Reaching their highest levels in months, prices surged past $95 per barrel, marking a 13% rally over the last five days.

US indices finished Wednesday’s session in the red as market participants questioned the viability of AI expenditures by technology giants. The NASDAQ 100 dropped 0.5%, while the S&P 500 and Dow Jones slipped 0.1% each. Despite beating quarterly estimates, Alphabet further increased its commitment to AI, raising its total investment target to $205 billion.

Asian markets, however, responded positively to the aggressive AI spending, with semiconductor shares powering a rally in Japan and Korea. The KOSPI surged over 2.3% on Thursday morning, while the Nikkei advanced nearly 1%.

GIFT NIFTY futures were trading 88 points lower at 7:45 am on Thursday, suggesting a gap-down start for the NIFTY50 despite the positive cues from Asian markets.

Chart check

The NIFTY50 fell 0.8% on Wednesday, closing below crucial moving average levels of 20 and 50 EMA on the hourly charts, indicating increased bearish momentum in the index.

On the daily charts, the index closed below 20 EMA but managed to defend 50 EMA on Wednesday. A closing below the 50 EMA level of 23,992 could further intensify the bearish sentiment for the index. The next support remains at the swing low trendline level of 23,650, which could also fill the gap of 15 June.

NIFTY OI analysis

The benchmark index witnessed immense selling pressure on Wednesday, changing the open interest dynamics for NIFTY50. The 24,200 calls hold the highest open interest, indicating a strong resistance to NIFTY50 on Thursday. Similarly, 24,000 puts hold the highest open interest on the downside, indicating near term support for NIFTY50.