Commodity Analysis

MCX-Nickel hovers above a key support

Gurumurthy K | Updated on October 17, 2018 Published 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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