By Vineet Kumar 
Trade Setup for Friday: Top Key Insights Before the Opening Bell
The stock market continues to navigate turbulent waters, with the Nifty 50 and Bank Nifty facing bearish pressure. Here’s a detailed breakdown to help you prepare for Friday’s trading session.
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1. Nifty 50 Support and Resistance Levels
The Nifty 50 resumed its downward trend, slipping nearly 0.7% on November 21 and closing at a 5-month low. The index formed a bearish candlestick with lower highs and lower lows, signaling ongoing weakness.
Support Levels: Immediate support lies at 23,200 (50-week EMA), followed by the critical 23,000 mark.
Resistance Levels: A potential bounce-back could face stiff resistance around 23,500–23,550 (200 DEMA).
Example: If Nifty rebounds to 23,500, but sellers dominate near this resistance zone, it might be an opportunity for short positions. Conversely, a drop below 23,000 could open doors to deeper corrections.
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2. Bearish Momentum Indicators
The Nifty’s trajectory paints a grim picture:
Trading well below its 200 DEMA (23,540) with above-average volumes.
Momentum indicators like RSI (28.34) and MACD continue to flash bearish signals.
On the weekly chart, the index is hugging the lower Bollinger Band, with the 10-week EMA crossing below the 20-week EMA.
Example: This setup resembles a car stuck in reverse on a slippery hill—gaining traction for a climb seems unlikely without a significant external push.
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3. Bank Nifty Key Levels
The Bank Nifty closed at 50,373, dropping 0.5% intraday. However, it managed to hold above the crucial 200 DEMA (49,900) for the fifth consecutive session.
Resistance Levels (Pivot Points): 50,601, 50,805, 51,136.
Support Levels (Pivot Points): 49,940, 49,736, 49,406.
Fibonacci Resistance: 50,890, 51,573.
Fibonacci Support: 49,288, 47,878.
Interestingly, the daily candlestick resembled a Hammer-like pattern, indicating buyers might be stepping in at lower levels.
Example: If the Bank Nifty holds 49,900 and shows signs of recovery, traders could consider short-term bullish strategies. However, failure to hold could accelerate selling pressure.
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4. Nifty Call Options Analysis
The 24,000 strike boasts the highest open interest (62.94 lakh contracts), making it a tough resistance zone.
Significant Call writing was noted at the 23,300, 23,400, and 23,500 strikes, adding 25.17 lakh, 23.99 lakh, and 21.29 lakh contracts, respectively.
Example: These Call positions reflect traders’ belief that Nifty will struggle to move above 23,500–24,000 in the short term.
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5. Nifty Put Options Analysis
Maximum open interest on the Put side is at the 23,000 strike (55.11 lakh contracts), providing robust support.
Notable Put writing occurred at 23,300 (24.18 lakh contracts) and 22,500 (13.85 lakh contracts).
Example: A breach of 23,000 could lead to panic selling, while sustained levels above 23,300 might hint at stabilization.
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6. Bank Nifty Call Options Analysis
The 52,000 strike holds the most open interest (25.14 lakh contracts), followed by 51,000 and 51,500.
Maximum Call writing occurred at 52,000, adding 4.71 lakh contracts, signaling strong resistance at higher levels.
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7. Bank Nifty Put Options Analysis
Strong support lies at 49,500 (24.44 lakh contracts) and 49,000.
Aggressive Put writing was observed at 49,500 (5.43 lakh contracts) and 50,000 (4.29 lakh contracts).
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8. Put-Call Ratio (PCR)
The Nifty PCR rose to 0.94 from 0.83, signaling improving sentiment despite bearish pressure.
A PCR above 0.7 hints at bullish intent as traders sell more Puts than Calls.
Conversely, a drop below 0.7 suggests bearish undertones.
Example: If PCR moves towards 1, it could indicate the market is bracing for a bounce-back rally.
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9. India VIX
Volatility continues to climb, with the India VIX rising to 15.99, up 2.09%. A rising VIX often spells trouble for bulls, reflecting increased fear among traders.
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Conclusion: Navigating Friday’s Market
With Nifty flirting with critical support levels and Bank Nifty clinging to its 200 DEMA, the market remains precariously balanced. Traders should:
Stick to Levels: Watch 23,000 (Nifty) and 49,500 (Bank Nifty) as crucial support zones.
Focus on Momentum: Monitor RSI and MACD for shifts in sentiment.
Prepare for Volatility: Keep an eye on India VIX—it’s a reliable gauge of market anxiety.
Pro Tip: In such uncertain times, consider hedging your positions or opting for option strategies like straddles or strangles to navigate the volatility.
Let’s see if the market chooses to swim or sink on Friday!
