Market Strategy

Technicals: Gold (Rs 29,265)

GURUMURTHY K. | Updated on January 18, 2014 Published on January 18, 2014

The MCX Gold futures contract for 10 gram traded in a narrow range between Rs 28,865 and Rs 29,314 last week. Technically, the contract is holding well above its 200-day moving average support at Rs 28,799. This keeps the short-term bullish outlook intact. Traders can hold on to their long positions and retain the stop-loss at Rs 28,300. A rally to Rs 31,000 looks likely in the coming weeks. The significant resistances are at Rs 29,790 and Rs 29,851. On the downside, the 200-day moving average is the immediate support level. Below this Rs 28,300 is the next significant support. In the medium-term, the contract can range between Rs 28,300 and Rs 31,000. A break out of this range will decide the trend thereafter.

Copper (Rs 458)

After the sharp fall a week before, the 55-day moving average support at Rs 454 a kg has lent some relief to the MCX Copper contract. The immediate outlook is mixed. The 21-day moving average resistance at Rs 463 and the support at Rs 454 are important levels to watch out for. Traders can wait for the contract to breakthrough either levels. If the contract declines below Rs 454, traders can go short with a stop-loss at Rs 459. Target on the downside is Rs 440. If the contract breaches Rs 463, traders can initiate long positions with a stop-loss at Rs 456. Target on the upside is Rs 475.

Crude Oil (Rs 5,777)

The MCX Crude Oil contract has bounced back from the low of Rs 5,640/barrel last week. Immediate support is at Rs 5,700. As long as the contract trades above this support, it can rise to Rs 5,950 or Rs 6,000 in the coming weeks. However, the trend is down and an immediate breach of Rs 6,000 looks less probable. Traders can take short position near Rs 5,950 with a stop-loss at Rs 6,150. In the medium-term, Rs 5,400-5,350 is the key support zone which can halt the downtrend. A reversal from this support zone can take the contract to Rs 8,000 in the long-term.

Natural gas (Rs 266)

The MCX Natural gas contract rose sharply to a high of Rs 276.7 for a million British thermal unit last week. This was in contrast to our view of a fall to Rs 240 . The immediate outlook is not clear. Traders can avoid taking positions until a clear signal emerges. The contract can remain range-bound between Rs 250 and Rs 280 for some time. A strong break above Rs 280 is required to signal a bullish outlook . Target above Rs 280 is Rs 350. But as long as the contract trades below Rs 280, a fall to Rs 220 is possible in the medium-term. Such a fall will be a good buying opportunity for long-term investors.

Zinc (Rs 128)

After two weeks of consecutive fall, the MCX Zinc contract moved up last week. But the contract faces immediate resistance at Rs 129. Only a strong break of this resistance will turn the outlook positive. Failure to breach Rs 129 and a subsequent reversal will be bearish for the contract. In such a scenario, short positions can be initiated with a stop-loss at Rs 132. The contract can fall to Rs 121 initially and then to Rs 115. A reversal from Rs 115 can avoid a further fall to Rs 105. The contract will then move in a sideways range between Rs 115 and Rs 135 in the short-term.

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