Thursday's trade setup: Nifty 50 likely to face key resistance at 23,800

The Nifty 50 is likely to face a significant hurdle at the 23,800 mark in the coming sessions. As long as it remains below the 200-day Exponential Moving Average (EMA), currently at 23,540, experts warn that a decline toward 23,200, aligned with the 50-week EMA, is a possible scenario.

After a seven-day decline, the market saw a slight recovery, with a 0.3 percent gain, though it struggled to close above the 200-day EMA for the third consecutive session on November 19. The Nifty failed to hold its gains, dropping by 262 points from its high of around 23,800. This move resulted in the formation of a Gravestone Doji pattern on the daily chart, indicating caution and a bearish trend. This pattern suggests that 23,800, representing the 50 percent Fibonacci retracement of the rally from June’s low to September’s record high, could act as a strong resistance level in the short term.

Key technical indicators show that the market remains in a bearish zone. The Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) both stayed in negative territory, signaling a weak trend.

In terms of resistance, the Nifty 50 faces hurdles at 23,709, 23,783, and 23,904, based on pivot points. On the downside, immediate support lies at 23,467, 23,393, and 23,272. The market also appears to be near the lower end of its Bollinger Bands, indicating potential for further downside if it fails to breach the 200-day EMA.

As for the Bank Nifty, it held above the 200-day EMA at 49,900 for the fourth consecutive session, but it remains within a trading range from the previous Wednesday, between 51,350 and 49,900. Despite a slight gain of 0.5 percent, the Bank Nifty closed at 50,627 and reached an upward-sloping trendline. However, it failed to maintain above the 10-day EMA of 50,950, forming a Doji-like candlestick, which indicates market indecision.

On the options front, significant data reveals key levels that traders should watch. For the Nifty, the maximum open interest was at the 24,000 strike, which may act as resistance, followed by 23,800 and 24,500 strikes. The maximum call writing was observed at the 24,300 strike. On the put side, the 23,000 strike saw the highest open interest, which could serve as a crucial support level.

For the Bank Nifty, the maximum open interest is at the 52,000 strike, while the 49,500 strike holds the largest open interest for support. The maximum put writing for the Bank Nifty was observed at the 51,000 strike.

The Put-Call ratio (PCR) for the Nifty has fallen to 0.83, indicating a shift towards a bearish sentiment in the market, as more call options are being sold compared to puts. Volatility also continued to rise, with the India VIX climbing 3.26 percent to 15.66, which may further unsettle bullish traders.

Overall, the market faces a cautious outlook with resistance levels close by, while key support zones remain in focus. Investors should monitor the developments closely as Thursday’s opening bell approaches, keeping an eye on the broader trend and how the Nifty and Bank Nifty respond to key technical levels.