Commodity Analysis

MCX-Nickel hovers above a key support

Gurumurthy K Updated on October 17, 2018

Nickel futures contract on the Multi Commodity Exchange (MCX) had fallen last week, which was contrary to our expectations. The contract made a high of ₹963.3 per kg on October 9 and has come-off sharply from there. The contract tumbled over 5 per cent from the high and made a low of ₹911.7 on Tuesday. It has bounced from this low and is currently trading at ₹923 per kg.

An immediate support is at ₹910, which is holding well as of now. If the contract manages to sustain above this support, an upmove to ₹950 and ₹960 is possible in the coming days. The region between ₹965 and ₹968 is a crucial resistance. A strong break and a decisive close above ₹968 is needed to turn the outlook bullish. Such a break will take the contract higher to ₹990. A further break above ₹990 will then increase the likelihood of the rally extending to ₹1,020 and ₹1,050 over the medium term.

On the other hand, if the MCX-Nickel futures contract breaks below ₹910, it can initially dip to ₹900. But a subsequent bounce from ₹900 and a break above ₹910 will see the contract moving higher. In such a scenario, a range-bound move between ₹900 and ₹968 can be seen. If the contract breaks further below ₹900, it can come under renewed pressure. Such a break can drag the contract lower to ₹880 in the short term. A break below ₹880 will then increase the possibility of the fall extending to ₹865 or even lower levels.

Trading strategy

Medium-term traders can hold the long positions taken at ₹935 and ₹925. Retain the stop-loss at ₹890 for the target of ₹1,025. Revise the stop-loss higher to ₹945 as soon as the contract moves up to ₹960.

(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)

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