Trade setup for Sep 25: Can NIFTY50 bounce back above 23,250 on Friday?

GIFT NIFTY futures indicate a flat start for NIFTY50 on Friday amid weak global market cues. Crude oil trades in high volatility, and Treasury yields continue to hit fresh highs.

Brent crude oil prices clawed back the previous day's gains on Friday morning as reports indicated that the US and Iran are considering a phased deal to reopen the Strait of Hormuz and lift the blockade on Iranian ports. Brent crude oil prices fell over 1% to $98 per barrel after hitting $102 per barrel on Thursday.

The US markets closed largely mixed after a sharp pullback the previous day. The Dow Jones closed 162 points lower, while the S&P 500 and the tech-heavy NASDAQ 100 ended flat. The US 10Y yields surged to 5.2% for the first time in over a two-decade period, indicating heightened borrowing costs and elevated interest rates.

Meanwhile, the Asian markets shrugged off the worries of the bond market rout as the Japanese and the Korean indices surged as much as 1.6% on Friday morning. On the flip side, the Chinese and the Hong Kong benchmark indices fell as much as 2.4% on Friday.

NIFTY50 chart summary

The benchmark NIFTY50 witnessed strong selling pressure at higher levels, erasing this week’s flat gains and ending over 380 points lower. On the hourly charts, the index again fell below the 20 and 50 EMA, indicating a bearish grip for the near term.

On the daily charts, the index also closed below the 23,100 crucial June swing low trendline support, indicating weakness. However, a decisive close below 23,000 levels on Friday could further intensify the weakness, taking the index to the next April low trendline support of 22,250.

NIFTY50 open interest summary

The open interest data for the coming monthly expiry indicates strong OI buildup on the call side, suggesting major resistance at all levels above 23,200. The 23,500 calls hold the highest open interest, indicating strong resistance on the upside. On the downside, 23,000 puts hold the highest open interest, indicating strong support for NIFTY50.