Market Strategy

Technicals: Copper (Rs 458.7)

Gurmurthy K. | Updated on December 21, 2013 Published on December 21, 2013

The MCX copper contract was caught in the range between Rs 457.2 and 462.45 last week. The short-term outlook is bullish. A bull flag formation is visible on the daily candle chart. Supports are at Rs 456 and Rs 448. Dips to these supports can attract fresh buying interest. Traders can hold on to their long position with a stop-loss at Rs 447 and accumulate more longs on dips to Rs 450. The contract can target Rs 470 immediately. The medium-term outlook is also bullish with strong support at Rs 430. A rally targeting Rs 510 looks likely over this time period.

Crude oil (Rs 6,192)

As predicted in this column last week, the MCX crude oil contract has seen bullish breakout from the range of Rs 5,750-6,100. The contract has risen 2.6 per cent last week, and it may continue to rise further this week targeting the next resistance at Rs 6,370. A break above Rs 6,370 can take the price to Rs 6,500. Supports are at Rs 6,100 and Rs 6,000. Short-term traders with high risk appetite can take long position on dips to Rs 6,100 with stop-loss at Rs 6,040.

If the contract breaches Rs 6,500, it confirms trend reversal. Else, the price movement of the last week should only be seen as a corrective rally of the downtrend since August.

Natural gas (Rs 276.1)

Last week, the MCX natural gas contract which fell initially, took support at Rs 260 and moved higher. The uptrend remains intact. Immediate support is at Rs 270 and the next support is at Rs 260. Traders can go long near Rs 270 and accumulate more longs if the contract dips to Rs 260, keeping stop-loss at Rs 255. The outlook is bullish for the contract with a target of Rs 300. The global natural gas price is also looking bullish and has more room for a rise to $5.4 in the coming weeks. This will limit the downside for the MCX natural gas contract and will keep the medium-term outlook bullish with a target of Rs 350.

Zinc (Rs 126.2)

After several weeks of consolidation between Rs 113 and Rs 121, the MCX zinc futures contract has seen a sharp 9 per cent rally in the last two weeks. The outlook is bullish with supports at Rs 121 and Rs 116. Traders can go long now and keep buying if the contract dips to Rs 121 in the coming week, with stop-loss at Rs 118. The contract can rise to Rs 130 immediately and then to Rs 137. For the medium-term, Rs 137 will be a key resistance. There is high probability a reversal from this resistance targeting Rs 125 on the downside.

Lead (Rs 136.25)

The MCX lead futures contract has rallied 7 per cent in the last two weeks, breaking the downtrend. There is a resistance at Rs 137 and a breach of this resistance will turn the outlook bullish for the contract. Traders can go long if the contract breaks Rs 137 with stop-loss at Rs 129. The contract can target Rs 145 immediately and then Rs 160. However, a failure to breach the resistance at Rs 137 can keep the price in a sideways range between Rs 126 and Rs 137 for a few more weeks. For the medium-term, Rs 160 is a strong resistance which can stop the rally and trigger a reversal.

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