Trade setup for Sept 4: NIFTY50 set for weekly loss; can it bounce back on Friday?

NIFTY50 is again set to open on a positive note on Friday morning, as indicated by GIFT NIFTY futures, which trade over 100 points higher. The buoyancy is driven by upbeat Asian markets and overnight gains in the US markets.

The Brent crude oil prices are headed for a weekly gains of over 10% on Friday, hitting $97 per barrel mark, at nearly two month high levels. The hostilities continue between the US and Iran, increasing the fears of supply disruption from the Strait of Hormuz.

The US markets closed in green across the board on Thursday after the treasury yields retreated from recent highs. Fed governor waller’s comments on inflation, boosted the investor sentiment and abated the fears of rate hikes. The Dow Jones rose over 624 points, while the S&P 500 and the NASDAQ 100 soared over 1.1% on Thursday.

Owing to the overnight gains in the US markets, the Asian markets opened in the green across the board. The Japanese and the Korean markets traded over 1% higher, led by renewed interests in the tech stocks.

NIFTY 50 chart summary

NIFTY50 closed below crucial psychological support levels of 24,000 for the second consecutive session on Thursday, indicating renewed bearishness in the index. The index also failed to defend the swing low trendline support from the April lows.

On the hourly charts, the index opened near 50 EMA, but failed to defend it on the closing basis. Going forward, the 23,600 remains the near-term support and 24,000 as the next resistance.

NIFTY50 open interest summary

The open interest data for coming weekly expiry showed skewness towards calls side, indicating limited upside for the NIFTY50 this week. The 24,000 calls held the highest open interest and witnessed strong open interest addition, indicating a strong resistance level. On the flipside, 23,500 puts hold the highest open interest, indicating a near-term support on the options chart.