Trade setup for July 8: GIFT NIFTY indicates gap down opening for NIFTY50, will it defend 24,200?

Indian benchmark indices are expected to open in red as crude oil prices bounced back from monthly lows on Tuesday. The GIFT NIFTY futures traded 145 points lower on Wednesday morning, suggesting a gap-down opening for NIFTY50.

Brent crude oil prices jumped over 5% on Tuesday amid renewed tensions in the Middle East. The US carried out fresh strikes on Iran and revoked the sanction waiver following Iran’s attack on commercial vessels in the Strait of Hormuz.

US markets closed deep in the red on Tuesday amid a sell-off in the tech stocks. The NASDAQ 100 plunged over 520 points or 1.7% lower as investors reassessed the risks of overspending in tech stocks. Meanwhile, the Dow Jones and the S&P 500 closed 0.25% and 0.45% lower, respectively.

The Asian markets largely opened in the red on Wednesday morning, as investors in Asia continued to remain cautious on the overheating in Japanese and Korean chip stocks. The Nikkei fell over 0.6%, and the KOSPI plunged over 1% on Wednesday. Meanwhile, Hong Kong’s Hang Seng index jumped over 1.4%.

NIFTY50 chart

The NIFTY50 snapped its winning streak on Tuesday and ended marginally lower. On the hourly charts, the index managed to close around the 20 EMA level, suggesting a consolidation period ahead. The hourly 20 EMA level of 24,273 and 50 EMA level of 24,538 remain crucial support for the NIFTY50.

On the daily charts, the index made a doji candlestick pattern near the 200 EMA level, indicating indecision in the direction of the index. The daily 20 EMA is broadly placed near 24,000, creating a significant gap from the current level of 24,400. This suggests that the index could enter a period of price or time consolidation until it retests this crucial support zone.

NIFTY50 open interest analysis

The initial buildup for coming weekly expiry suggests that the index 24,500 level remains a crucial resistance zone for NIFTY50 on Wednesday. On the other hand, 24,000 puts witnessed the highest open interest on the downside, indicating a strong support for the index.