Trade setup for December 18: Top 15 things to know before the opening bells

Nifty Trade setup for December 18

The Nifty 50 continued its downtrend and lower high–lower low structure for the third straight session, falling nearly 0.2 percent on December 17. It remained below short-term moving averages and moved closer to the 50-day EMA (25,765) and the lower Bollinger Band (25,735), with weakening momentum indicators signalling a bearish bias. This suggests that 25,750–25,700 is expected to be the immediate key support for the index; a fall below this zone could drive the index toward 25,500, the crucial support. On the higher side, 25,950–26,050 is expected to be the resistance zone, and sustaining above it could open the door for 26,300, experts said.

Here are 15 data points we have collated to help you spot profitable trades:

1) Key Levels For The Nifty 50 (25,819)

Resistance based on pivot points: 25,900, 25,938, and 25,998

Support based on pivot points: 25,779, 25,741, and 25,680

Special Formation: The Nifty 50 reported a bearish candle with minor upper and lower shadows on the daily charts, indicating bears gaining control. The index traded below the 10- and 20-day EMAs as well as the midline of the Bollinger Bands, and above the 50-day EMA and the lower Bollinger Band. The RSI dropped to 46.47, and the Stochastic RSI turned bearish. The MACD remained below the reference line, with the histogram below the zero line. All this indicates weakening momentum and a continued bearish bias.

2) Key Levels For The Bank Nifty (58,927)

Resistance based on pivot points: 59,076, 59,153, and 59,278

Support based on pivot points: 58,827, 58,750, and 58,626

Resistance based on Fibonacci retracement: 59,467, 60,895

Support based on Fibonacci retracement: 58,643, 58,296

Special Formation: The Bank Nifty formed a bearish candle with upper and lower shadows on the daily timeframe, with a continuation of the lower top–lower bottom formation for the third consecutive session. The index traded between the middle and lower Bollinger Bands, and below short-term moving averages. The momentum indicators were also weak, with the RSI at 49.81, and the Stochastic RSI and MACD below the reference line, along with a further fall in the histogram. All this indicates continued weakness in the index.

3) Nifty Call Options Data

According to the weekly options data, the 26,000 strike holds the maximum Call open interest (with 1.3 crore contracts). This level can act as a key resistance level for the Nifty in the short term. It was followed by the 25,900 strike (1 crore contracts) and 26,300 strike (81.55 lakh contracts).

Maximum Call writing was observed at the 26,000 strike, which saw an addition of 53.97 lakh contracts, followed by the 25,900 and 25,850 strikes, which added 50.97 lakh and 33.44 lakh contracts, respectively. There was hardly any Call unwinding seen in the 25,100-26,600 strike band.

4) Nifty Put Options Data

On the Put side, the maximum Put open interest was seen at the 25,500 strike (with 64.56 lakh contracts), which can act as a key support level for the Nifty in the short term. It was followed by the 25,800 strike (60.94 lakh contracts) and the 25,300 strike (47.85 lakh contracts).

The maximum Put writing was placed at the 25,800 strike, which saw an addition of 30.11 lakh contracts, followed by the 25,350 and 25,400 strikes, which added 21.49 lakh and 18.6 lakh contracts, respectively. The maximum Put unwinding was seen at the 26,000 strike, which shed 2.47 lakh contracts, followed by the 26,200 and 25,950 strikes, which shed 1.02 lakh and 61,725 contracts, respectively.

5) Bank Nifty Call Options Data

According to the monthly options data, the maximum Call open interest was seen at the 59,500 strike, with 18.46 lakh contracts. This can act as a key resistance level for the index in the short term. It was followed by the 60,000 strike (17.83 lakh contracts) and the 59,000 strike (12 lakh contracts).

Maximum Call writing was observed at the 59,000 strike (with the addition of 2.25 lakh contracts), followed by the 59,100 strike (1.32 lakh contracts) and 59,200 strike (95,025 contracts). The maximum Call unwinding was seen at the 61,000 strike, which shed 58,660 contracts, followed by the 60,700 and 60,800 strikes, which shed 17,080 and 15,610 contracts, respectively.

6) Bank Nifty Put Options Data

On the Put side, the 59,500 strike holds the maximum Put open interest (with 14.8 lakh contracts), which can act as a key level for the index. This was followed by the 59,000 strike (13.23 lakh contracts) and the 58,000 strike (11.1 lakh contracts).

The maximum Put writing was placed at the 58,000 strike (which added 81,375 contracts), followed by the 58,900 strike (65,205 contracts) and the 58,800 strike (52,080 contracts). The maximum Put unwinding was seen at the 59,500 strike, which shed 2 lakh contracts, followed by the 60,000 and 59,300 strikes, which shed 68,495 and 57,435 contracts, respectively.

7) Funds Flow (Rs crore)

8) Put-Call Ratio

The Nifty Put-Call ratio (PCR), which indicates the mood of the market, declined further to 0.77 on December 17, compared to 0.9 in the previous session.

The increasing PCR, or being higher than 0.7 or surpassing 1, means traders are selling more Put options than Call options, which generally indicates the firming up of a bullish sentiment in the market. If the ratio falls below 0.7 or moves towards 0.5, then it indicates selling in Calls is higher than selling in Puts, reflecting a bearish mood in the market.

9) India VIX

The India VIX, which measures expected market volatility, hit its lowest closing level, falling 2.24 percent to 9.84. The index remained well below all key moving averages. This indicates a comfort zone for bulls; however, sustaining the VIX at such low levels also increases the possibility of a sharp market move on either side in the near term.

10) Long Build-up (30 Stocks)

A long build-up was seen in 30 stocks. An increase in open interest (OI) and price indicates a build-up of long positions.

11) Long Unwinding (40 Stocks)

40 stocks saw a decline in open interest (OI) along with a fall in price, indicating long unwinding.

12) Short Build-up (106 Stocks)

106 stocks saw an increase in OI along with a fall in price, indicating a build-up of short positions.

13) Short-Covering (36 Stocks)

36 stocks saw short-covering, meaning a decrease in OI, along with a price increase.

14) High Delivery Trades

Here are the stocks that saw a high share of delivery trades. A high share of delivery reflects investing (as opposed to trading) interest in a stock.

15) Stocks Under F&O Ban

Securities banned under the F&O segment include companies where derivative contracts cross 95 percent of the market-wide position limit.

Stocks added to F&O ban: Nil

Stocks retained in F&O ban: Bandhan Bank

Stocks removed from F&O ban: Nil