Trade setup for May 11: Can NIFTY50 defend 20 EMA level on Monday?

Indian benchmark indices are expected to open lower on Monday morning amid renewed tensions between Iran and the US. President Trump refused Tehran’s proposal to shift the enriched uranium to a third country while refusing to dismantle its nuclear infrastructure. Trump dismissed the proposal by posting “TOTALLY UNACCEPTABLE” in his social media post on Truth Social.

Consequently, Brent crude oil prices jumped over 4% on Monday morning, erasing partial losses of the previous week. Crude oil prices dropped over 8% in the previous week amid the hopes of a peace deal between the two nations. However, a few instances in the Strait of Hormuz kept the investors and traders on edge.

The global market cues remain muted for Monday morning after an upbeat closing across the board. The US stock market futures opened in red, followed by Asian benchmarks in Japan and Korea with up to 0.4% losses.

The GIFT NIFTY futures also indicate a weak opening for the NIFTY50 as crude oil prices bounce back above $104 per barrel. The domestic currency will also remain in focus as the Dollar index regained the $98 level against the basket of currencies amid renewed tensions in the Middle East.

Domestically, the automobile stocks, solar companies, gold and jewellery companies will remain in focus after PM Modi urged citizens to resume work-from-home work culture to save on fuel. Further, he also added to postpone gold purchases, travelling abroad for one year, as it would help ease some pressure on the domestic currency.

NIFTY50 chart analysis

On the daily charts, the NIFTY50 has returned to the broad trading range of 24,000 to 24,500. The index closed below the 50 EMA level of 24,190 as selling pressure increased above 24,200. However, the index defended the 20 EMA level for 20 consecutive sessions, indicating 24,067 as the crucial support level for the NIFTY50.

NIFTY50 OI analysis

Ahead of the weekly expiry on May 12, the upside remains locked and protected above 24,200 levels as 24,300, 24,400 and 24,500 calls hold strong open interest concentration. Meanwhile, the 24,000 remains a crucial protection and support zone for the NIFTY50, with the highest open interest on the put side of the strike price.