Trade setup for May 26: Can NIFTY50 defend 50-EMA levels on expiry day?

Indian benchmark indices are expected to open on a flat-to-negative note amid mixed global market cues and following a strong rally on Monday. The global market cues remain mixed with a positive bias as FII buying, sharp drop in US treasury yields could act as a sentiment booster.The domestic cues remained positive with renewed FII buying of ₹821 crore. The Q4 earnings season has remained broadly inline with the expectations and showed strong growth across categories, which remains a sentiment booster.

Brent crude oil prices steadied near $97 per barrel on Tuesday morning after plunging nearly 10% on Monday as investors eyed a deal between the US and Iran. However, some cautiousness prevailed after Trump said that the attacks may follow soon if the deal failed.

The US stock futures held the previous day's gains as the US markets open on Tuesday after an extended holiday on Monday. Investor sentiment in the US markets remains upbeat as a potential deal with Iran could help cooling energy prices in the near future.

The Asian market investor sentiment remains mixed after a 10% drop in crude oil prices globally. Japan's Nikkei opened flat-to-negative and Korea’s Kospi jumped over 3% on Tuesday morning.

NIFTY50 charts

The NIFTY50 index finally managed to close above crucial resistance levels of 23,850 and 24,000 on the daily charts. Additionally, a closing above the daily 20 EMA and 50 EMA levels changed the structure to bullish. The bullish momentum can be confirmed if the index manages to defend the 50-EMA levels on the expiry day. Meanwhile, 24,000 remains the nearest and the crucial support level and 24,400 as the key resistance level.

NIFTY50 OI analysis

The option data changed drastically on Monday after the index managed to close above crucial resistance levels. The 24,000 calls witnessed heavy unwinding and strong open interest addition on the put side. Similarly, the 23,800,23,900, 23,950 levels also show strong open interest concentration, indicating strong downside protection below 24,000 levels. On the flipside, the 24,500 calls hold the highest open interest, indicating a strong resistance for Today’s expiry.