Trade setup for Sept 16: Can NIFTY50 defend 23,000 on Wednesday and bounce back?

NIFTY50 is expected to open on a flat note on Wednesday after ending over 200 points lower on Tuesday. The GIFT NIFTY futures traded 15 points higher, suggesting a flat start for Indian markets.

Brent crude oil prices remain elevated above $108 per barrel on Wednesday morning, indicating sustained supply disruptions in the Middle East region due to conflicts.

The US stock market closed in the red as the Treasury yields surged to two-decade high levels. The Dow Jones and the S&P 500 closed 0.4%, while the NASDAQ 100 plunged 0.65% on Tuesday.

The Asian markets extended their losses for the third consecutive session this week. The Japanese benchmark index plunged over 200 points, ahead of policy announcement by Bank of Japan on Friday. The KOSPI and Hang Seng index plunged as much as 1%, as elevated crude oil prices weigh investor sentiment.

NIFTY50 chart summary

The index plunged over 200 points on Tuesday, after opening gap up, the index witnessed strong selling pressure at higher levels. The index nearly touched 23,600 levels, but failed to sustain above the hourly 20 EMA levels.

On the daily charts, the index made an bearish engulging pattern, indicating strength in bearish momentum as every rise is sold out at higher levels. The daily RSI level now indicates extreme oversold territory as it touched March 2025 low level. Going forward, the next support now stands at June swing low level at 23,077.

NIFTY 50 open interest summary

The initial buildup for coming weekly expiry indicates a strong bear grip on the index as 23,300 to 23,500 calls witnessed strong open interest addition on Tuesday, indicating limited upside above 23,300. Meanwhile, the downside remains protected at 23,000, with highest open interest on the downside.