Trade setup for Nov 6: Can NIFTY50 defend 200 EMA levels after gap-down opening on Friday?

Owing to weak global market cues, the GIFT NIFTY futures fell over 120 points on Friday morning, indicating a gap-down opening for NIFTY50.

Brent crude oil prices bounced back 5% to $100 per barrel on Thursday after a steep fall in the earlier sessions. Investors reassessed the risks in the Middle East war as market experts believe Washington could intensify the military offensive against Iran.

The US stock markets suffered one of the worst losses since the COVID-19 crash as investors believe Democrats could halt the AI spending spree and increase the scrutiny on the new buildouts and capex. The NASDAQ 100 fell 6.3%, the S&P 500 plunged 4.3%, and the Dow Jones dipped 3.4%.

Taking cues from the overnight rout in the US tech stocks, the Asian markets too suffered a big blow on Friday morning. The Korean KOSPI fell 5.4%, followed by Japan’s Nikkei at 5.8%, and Taiwan’s weighted average index fell 7%, the most. Meanwhile, Hong Kong’s Hang Seng relatively outperformed with 1% losses.

NIFTY50 chart check

NIFTY50 extended its gains for the sixth consecutive session on Thursday, rallying over 570 points. This also marked the second-best daily gain in 2026 after April 8. The index managed to defend the 20 and 50 EMA for four sessions, indicating renewed strength in the Indian markets.

Besides this, the index also defended 200 EMA levels for a second consecutive session, further extending its bullish strength at the higher levels. However, a sharp swing from the lower levels in just six sessions warrants caution going forward. The index remains in overbought territory, suggesting a retracement or pullback in the current rally.

The index could find support near the 200 EMA levels of 23,900 in the medium term and 23,400 in the long-term scenario. A pullback from current levels, followed by support, will help determine the index's next course of action.

NIFTY50 open interest summary

The open interest data for coming weekly expiry indicates strong OI buildout at the higher levels near 25,000 levels, indicating a strong resistance on the upside. Similarly, the downside remains protected at 24,400, 24,300, and 24,200 levels, with strong open interest addition on Thursday.