Trade setup for July 22: Top 15 things to know before the opening bells

Nifty Trade Setup for July 22

The Nifty 50 snapped its two-day losing streak and gained half a percent on July 21, making a positive start to the week. However, the index still traded below short-term moving averages (10-day and 20-day EMAs) with the continuation of the lower tops-lower bottoms formation. Until the Nifty reclaims and sustains above the 25,200-25,250 resistance zone, range-bound trading may continue, with support at 24,900. A break below this support could bring the index down to 24,700, but if it moves above the resistance zone, 25,400 will be the key level to watch, according to experts.

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

1) Key Levels For The Nifty 50 (25,091)

Resistance based on pivot points: 25,116, 25,170, and 25,257

Support based on pivot points: 24,941, 24,887, and 24,799

Special Formation: The Nifty 50 formed a bullish candle with a lower shadow on the daily timeframe, indicating buying interest at support zones between 25,000-24,900. The traded volume was above average, suggesting that the bullish move has solid backing. The index defended the 50-day EMA, but still traded below the 20-day EMA. The MACD histogram showed some improvement, and the RSI at 47.63 inclined upward, although it still displayed a sustained bearish crossover. This indicates that while there is some upward momentum, the market sentiment remains cautious until a stronger move above the key resistance levels is confirmed.

2) Key Levels For The Bank Nifty (56,953)

Resistance based on pivot points: 57,009, 57,180, and 57,458

Support based on pivot points: 56,453, 56,281, and 56,003

Resistance based on Fibonacci retracement: 57,050, 57,566

Support based on Fibonacci retracement: 56,389, 56,096

Special Formation: The Bank Nifty recouped all of its previous day's losses and gained 1.2%, forming a bullish candle with a lower shadow on the daily charts, signaling buying interest at lower levels. The banking index climbed above the 20-day EMA and tested the midline of the Bollinger Bands intraday. The MACD histogram also showed improvement after a couple of days of weakness, while the RSI climbed above the 50-mark at 54.10 and sharply inclined upward. This suggests that the banking sector is showing signs of strength, with potential for further upside if the momentum is sustained.

3) Nifty Call Options Data

According to the weekly options data, the 25,500 strike holds the maximum Call open interest (with 79.19 lakh contracts). This level can act as a key resistance for the Nifty in the short term. It was followed by the 25,100 strike (75.21 lakh contracts), and the 25,200 strike (71.67 lakh contracts).

Maximum Call writing was observed at the 25,600 strike, which saw an addition of 11.42 lakh contracts, followed by the 25,500 and 25,700 strikes, which added 11.29 lakh and 9.39 lakh contracts, respectively. The maximum Call unwinding was seen at the 25,200 strike, which shed 13.88 lakh contracts, followed by the 25,000 and 24,950 strikes, which shed 11.35 lakh and 3.68 lakh contracts, respectively.

4) Nifty Put Options Data

On the Put side, the maximum Put open interest was observed at the 25,000 strike (with 79.67 lakh contracts), which can act as a key support level for the Nifty. It was followed by the 24,900 strike (74.4 lakh contracts) and the 25,100 strike (70.18 lakh contracts).

The maximum Put writing was placed at the 25,100 strike, which saw an addition of 50.06 lakh contracts, followed by the 25,000 and 24,900 strikes, which added 33.06 lakh and 25.8 lakh contracts, respectively. The maximum Put unwinding was seen at the 25,400 strike, which shed 72,075 contracts, followed by the 25,600 and 25,300 strikes, which shed 24,300 and 20,475 contracts, respectively.

5) Bank Nifty Call Options Data

According to the monthly options data, the maximum Call open interest was seen at the 57,000 strike, with 16.78 lakh contracts. This can act as a key resistance level for the index in the short term. It was followed by the 57,500 strike (12.69 lakh contracts) and the 58,000 strike (10.41 lakh contracts).

Maximum Call writing was visible at the 56,900 strike (with the addition of 1.31 lakh contracts), followed by the 56,800 strike (46,585 contracts), and the 57,900 strike (33,145 contracts). The maximum Call unwinding was seen at the 56,000 strike, which shed 4.15 lakh contracts, followed by the 56,500 and 57,000 strikes, which shed 3.83 lakh and 2.92 lakh contracts, respectively.

6) Bank Nifty Put Options Data

On the Put side, the 56,000 strike holds the maximum Put open interest (with 19.17 lakh contracts), which can act as a key support level for the index. This was followed by the 57,000 strike (10.24 lakh contracts) and the 55,000 strike (9.61 lakh contracts).

The maximum Put writing was observed at the 56,800 strike (which added 1.65 lakh contracts), followed by the 56,700 strike (1.48 lakh contracts) and the 56,900 strike (1.43 lakh contracts). The maximum Put unwinding was seen at the 56,000 strike, which shed 3.44 lakh contracts, followed by the 55,900 and 56,200 strikes, which shed 30,940 and 30,835 contracts, respectively.

7) Funds Flow (Rs crore)

8) Put-Call Ratio

The Nifty Put-Call ratio (PCR), which indicates the mood of the market, jumped to 0.96 on July 21, compared to 0.78 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, remained in lower zones, declining 1.67% to 11.20. This supports market stability, but market participants should stay alert for significant upside or downside moves, as volatility can rise quickly.

10) Long Build-up (54 Stocks)

A long build-up was seen in 54 stocks. An increase in open interest (OI) and price indicates a build-up of long positions.

11) Long Unwinding (33 Stocks)

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

12) Short Build-up (45 Stocks)

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

13) Short-Covering (94 Stocks)

94 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, RBL Bank

Stocks removed from F&O ban: Angel One, Hindustan Copper

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.

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