After snapping a two-day losing streak, the Nifty 50 closed the May 29 session on a positive note, climbing 81 points to end at 24,833.60. However, despite this bounce-back, the market sent a mixed signal by forming a Doji candlestick on the daily chart—often a sign that traders are unsure about the next big move.
Key Technical Levels to Watch
- Resistance Zone: The index is approaching a critical resistance level between 25,000 and 25,100. If bulls can break through this ceiling with volume support, we may see momentum carry it further.
- Support Zone: On the downside, support is building around the 24,700–24,650 region. A break below this may take the index toward the more solid base near 24,400–24,500.
- Moving Average Check: The 21-day EMA is currently around 24,600. This dynamic support level adds weight to the bullish case if the index stays above it.
Market Sentiment and External Cues
- Global signals are mildly positive. European indices showed strength, and U.S. market futures are in the green, potentially setting a favorable tone for Indian equities.
- On the domestic front, the Gift Nifty is pointing to a flat-to-positive start, which aligns with the cautious but constructive mood on Dalal Street.
Strategy for Traders
For the upcoming session on May 30, traders should keep a close eye on the 24,700–25,100 range. The broader structure suggests consolidation, but any breakout above 25,100 could open the gates for a fresh uptrend. On the flip side, a slide below 24,650 may put pressure on short-term sentiment.
4H Technical Overview
1. Trend Structure:
Nifty is currently trading within a broken descending channel on the 4-hour chart. If it sustains above the 24,500 level, momentum is expected to build toward the 25,000–25,100 resistance zone.
2. Key Support and Resistance Levels:
- Support: The immediate support lies around 24,600, aligning with the 20-day Exponential Moving Average (EMA), which could act as a cushion against short-term declines.
- Resistance: On the upside, the 24,900–25,000 band continues to offer resistance, where the index has previously faced rejection.
3. Technical Indicators:
- Relative Strength Index (RSI): The RSI is trending upwards, indicating moderate bullish momentum.
- Stochastic RSI: Currently in the overbought zone, suggesting a potential for short-term consolidation or pullback.
- MACD: The MACD line is above the signal line, supporting the bullish outlook.
Market Sentiment and External Factors
- Global Cues: Positive signals from global markets, including gains in Asian shares and Wall Street futures, may provide support to the domestic indices.
- Domestic Factors: The broader market sentiment remains cautious, with investors awaiting further economic data and global developments.
Trading Strategy
- Bullish Scenario: If Nifty sustains above 24,700, it could attempt to break the 25,000 resistance, potentially targeting 25,100 and beyond.
- Bearish Scenario: A drop below 24,600 may lead to a retest of the 24,500 support zone.
Options Market Overview
Open Interest (OI) Analysis:
- Highest Call OI: 24,900 strike with approximately 1.9 crore contracts, indicating significant resistance at this level.
- Highest Put OI: 24,700 strike with about 1.3 crore contracts, suggesting strong support here.
This positions Nifty within a tight range of 24,700 to 24,900, reflecting a market in consolidation.
Strategic Options Setups
1. Short Strangle (Neutral Strategy)
- Sell 24,700 Put
- Sell 24,900 Call
- Objective: Profit from time decay if Nifty remains between 24,700 and 24,900.
- Risk: Potential losses if Nifty moves significantly beyond this range.
2. Bull Call Ladder (Moderately Bullish Strategy)
- Buy 24,700 Call
- Sell 24,900 Call
- Sell 25,100 Call
- Objective: Benefit from a limited upside move while reducing cost through premium received from higher strike calls.
- Risk: Potential losses if Nifty surges well beyond 25,100.
This strategy is suitable when expecting a moderate rise but anticipating resistance near 25,000.
3. Bear Put Spread (Moderately Bearish Strategy)
- Buy 24,700 Put
- Sell 24,500 Put
- Objective: Profit from a moderate decline in Nifty, with limited risk and cost.
- Risk: Losses are capped and occur if Nifty remains above 24,700.
This setup is effective when anticipating a downturn but within a defined range.
Market Sentiment and Outlook
- Resistance Levels: 24,900 to 25,300
- Support Levels: 24,700 and 24,200
The market exhibits a cautious tone, with significant resistance near 25,000 and support around 24,700.
Key Takeaways
- Range-Bound Expectation: Nifty is likely to trade between 24,700 and 24,900 in the near term.
- Strategic Approach: Implementing neutral strategies like Short Strangle can be beneficial in a consolidating market.
- Directional Bias: For a bullish outlook, consider Bull Call Ladder; for a bearish perspective, Bear Put Spread offers a defined risk approach.
Summary
- Bias: Neutral-to-positive
- Range to Watch: 24,700 – 25,100
- Breakout Zone: Above 25,100 (Bullish)
- Breakdown Zone: Below 24,650 (Bearish)
