Nifty 50 May Futures (22,794)
Nifty 50 is under pressure. The index opened with a wide gap-down at 22,762.75. It then bounced to an intraday high of 22,825.50 and then came down slightly from there. Nifty is currently trading at 22,801, down 0.38 per cent. The advances/declines ratio is currently at 16:34. This indicates weakness in the index.
Nifty 50 outlook
Intraday resistance is around 22,850. As long as the Nifty stays below this resistance, the bias will remain negative. Support is around 22,760. A break below it can drag the Nifty down to 22,650 in the coming sessions.
A decisive rise above 22,850 is needed ease the downside pressure. Only in that case, Nifty can rise back to 22,950-23,000 levels again.
Global Indices
In Asia, barring the Shanghai Composite (3,119), up 0.33 per cent, other major indices are in red. Hang Seng (18,531) and Kospi (2,685) are down 1.54 and 1.37 per cent respectively. Nikkei 225 (38,683) is down 0.45 per cent.
The Dow Jones Industrial Average (38,852.86), down 0.55 per cent has declined below 39,000. It can test 38,500 in the near-term. Whether the index bounces back from around 38,500 or not will determine the next leg of move. We will have to wait and watch.
Nifty 50 Futures
The Nifty 50 May Futures (22,794) is down 0.6 per cent. There is room to test 22,720-22,700 during the day. If the contract manages to bounce from around 22,700, then a rise back to 22,800-22,850 is possible today. But a break below 22,700 can intensify the sell-off and drag the Nifty 50 May Futures contract down to 22,550.
Resistances for the day are at 22,870 and 22,920.
Trade Strategy
Considering the risk/reward ratio at current levels, we suggest traders can go short on a rise at 22,840. Keep a stop-loss at 22,880. Trail the stop-loss down to 22,810 as soon as the contract falls to 22,780. Move the stop-loss further down to 22,785 when the contract touches 22,760 on the downside. Exit the shorts at 22,740.
Supports: 22,700, 22,550
Resistances: 22,870, 22,920