Trade setup for Oct 12: Can NIFTY50 witness follow through buying on Monday?

Indian benchmark indices are expected to open on a positive note on Monday, after a smart bounce back on Friday. The GIFT NIFTY futures surged 20 points on Monday morning, pointing towards a steady start for NIFTY50.

The crude oil prices opened with losses on Monday morning, as oil traders shrugged off worries over renewed escalations in the region after Houthi rebels attacked Saudi Arabia. Brent crude oil prices edged 1% lower at $103 per barrel after surging 1.9% in the last week.

The Asian markets opened on a mixed note, as Japanese, Korean and Taiwanese benchmark indices opened in the red, with Korean Kospi falling the most at 1.9%. On the flip side, Hong Kong’s Hang Seng index bucked the broader weakness to jump 0.8% on Monday.

The US markets closed the previous week on a positive note after the Dow Jones closed over 420 points higher and the NASDAQ 100 and S&P 500 also surged 0.6%. Wall Street action will now be determined by the quarterly earnings, beginning this week from Monday.

NIFTY chart check

NIFTY50 staged a smart bounceback, surging over 288 points on Friday, keeping some hopes alive for bulls. On the hourly charts, the index closed above the 20 EMA, but faced resistance near the 50-EMA levels.

Similarly, on the daily charts, the index formed a bullish harami candlestick pattern, indicating a potential reversal from the downtrend. Going forward, 22,200 now remains a strong support zone, beyond which the weakness could intensify further. On the upside, 22,700 remains a crucial resistance zone, beyond which bullishness could improve.

NIFTY50 open interest summary

The open interest data, after Friday’s sharp bounceback, indicates a renewed support and resistance zone for NIFTY. The 22,500 puts added over 1 crore contracts on Friday and held the highest open interest, indicating strong support for NIFTY50 ahead of this week’s expiry on Tuesday. On the flip side, 23,000 calls hold the highest open interest, indicating strong resistance.

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