May 12 trade setup: Will NIFTY50 be able to hold 23,800 and rise above 24,100 on the day of expiration?

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Due to poor global indications, the benchmark indices are predicted to open lower once more on Tuesday. Tuesday morning, GIFT NIFTY futures fell more than 180 points as a result of rising commodities costs and sluggish Asian markets.

Asian markets saw mixed results on Tuesday morning, with Japanese markets remaining close to record highs and trading flat to negative. In the meantime, following an extraordinary rally, Korean markets saw significant profit booking. Due to investors' preference to take some money off the table, the KOSPI fell more than 3% on Tuesday morning.

The price of Brent crude oil remained close to $105 per barrel despite the lackluster news coming from the Middle East. Investor concerns have grown as the Strait of Hormuz's effective shutdown continues to put pressure on the oil supply.

As investor anxiety over further escalations in the Middle East grew, US markets maintained their record run with a cautious outlook. As tech stocks continued to boost markets, the Dow Jones, S&P 500, and NASDAQ finished almost 0.2% higher on Monday.



After fluctuating for 11 straight trading days in a narrow range of 24,000 to 24,500, the NIFTY50 index closed 360 points down on Monday. After defending it for 20 trading days, the index closed below the 20 EMA and broke the psychological support level of 24,000. The 20 EMA level was important short-term support for the index, as was noted in the previous newsletter, and a closing below it suggests that bearish sentiment has taken hold of the index. A closing over 24,100, however, might disprove the bearish setup and return to the trading range.

Strong resistance at the 24,000 level is suggested by the open interest increase for today's expiration. Conversely, a strong support is indicated by the largest open interest in 23,500 puts. However, there might be some short covering above those levels if the index crosses 24,000 throughout the session.

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Disclaimer: Derivatives trading must be done only by traders who fully understand the risks associated with them and strictly apply risk mechanisms like stop losses. We do not recommend any particular stock, securities or strategies for trading. The securities quoted are exemplary and are not recommended. The stock names mentioned in this article are purely for showing how to do analysis

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