Trade setup for Sept 3: Can NIFTY50 bounce back above 24,000 on Thursday?

GIFT NIFTY futures indicate a gap-up opening for NIFTY50 on Thursday morning, as global markets posted a smart recovery after the previous day’s slump. However, cautiousness prevailed as crude oil prices remained elevated amid ongoing hostilities in the region.

The US markets staged a smart recovery from the lower levels on Wednesday as Treasury yields fell from the recent highs. The Dow Jones & the S&P500 rose over 0.5%, while the NASDAQ 100 remained steady with 0.2% gains on Wednesday.

Consequently, the Asian markets opened mixed with a positive bias on Thursday morning, with the Hong Kong and Korean indices gaining as much as 1%. Meanwhile, the Japanese markets hovered near flat lines on Thursday morning.

Brent crude oil futures held their gains near the $95 per barrel mark on Thursday morning as the US continued its strikes in Iran, claiming full control over the Strait of Hormuz. The US President said the hostilities could be short-lived.

NIFTY50 chart summary

The index closed below crucial support levels on multiple levels on Wednesday. Firstly, the index closed below 24,000 pivotal support for the first time in over a period of more than a month. Secondly, the index also closed below the crucial trendline support from April, suggesting intensified weakness.

Going forward, 23,600 remains the next near-term support for the NIFTY50, which is a swing low from July. Additionally, the upside remains capped at 24,200 levels, which is also the 50-EMA on the daily charts.

NIFTY50 open interest summary

The open interest data for the coming weekly expiry indicates strong skewness towards the call side, indicating limited upside potential. The 24,200 calls hold the highest open interest, indicating strong resistance to the NIFTY50. On the flip side, 23,800 puts hold the highest open interest, indicating near-term support