Trade setup for May 18: Can NIFTY50 defend 23,400 level on Monday?

Indian markets are expected to open lower on Monday morning as external shocks continue to sour investor sentiments. The Indian rupee is expected to remain under pressure as the dollar index jumped early morning, owing to elevated crude oil prices and soaring US treasury yields.

Brent crude oil prices surged over 2% on Monday morning after President Trump warned that Tehran is running out of time to reach an agreement with Washington. Meanwhile, the two sides remain divided, with the US offering no tangible concessions during the negotiations.

The US markets closed the previous week amid strong volatility, with major benchmark indices ending in the red. The S&P 500 closed with minor gains, while NASDAQ and Dow Jones ended with nearly 0.4% losses. All eyes remain on NVIDIA’s earnings this week.

Asian markets opened lower on Monday morning, amid renewed tensions and soaring crude oil prices. Japan’s Nikkei plunged nearly 1000 points, Hong Kong’s HANG SENG fell 1%, and Korea’s KOSPI opened flat with 0.3% losses.

On technical charts, the index continues to remain in the broad range of 23,300 to 23,800 amid high volatility. The index pulled back its gains near 23,800 levels, which remains a key resistance zone. Similarly, the 23,200-23,300 zone remains a crucial support level for the index. Any breakdown or breakout above these levels, will help decide the direction of markets for the near term.

The options data for tomorrow's expiry indicates strong open interest addition at 23,700, 23,800,23,900 and 24,000 calls, indicating a strong resistance zone above 23,700 levels. On the flipside, 23,400 puts witnessed open interest contraction, indicating a open downside below 23,400 till tomorrow's expiry.