Commodity Calls

Bias is turning negative for MCX-Nickel

Gurumurthy K | Updated on December 12, 2018 Published on December 12, 2018

Nickel futures contract on the Multi Commodity Exchange (MCX) seems to be lacking strength. The contract fell to a low of ₹762 per kg last week on Thursday. Though it has bounced higher from the low, the upward reversal is not strong. The contract made a high of ₹791 on Tuesday and has come-off slightly from there. It is currently trading at ₹777 per kg.

The 21-day moving average resistance at ₹783 is restricting the contract from a strong rally. Also, there is another key resistance is at ₹800. The outlook will turn positive only if the contract breaks above ₹800 decisively. Such a break will then ease the downside pressure and will take the contract higher to ₹830. But the price action over the last few days leaves the bias negative for the contract. It also keeps the possibility high of the contract to remain below ₹800.

As long as the contract trades below ₹800, a dip to ₹750 is likely in the near term. A strong break below ₹750 can take the contract initially lower to ₹740. A further break below ₹740 will then increase the likelihood of the downmove extending to ₹720 or even lower thereafter.

Trading strategy

Traders who have taken long positions at ₹781 and ₹773 should remain cautious. Revise the stop-loss higher to ₹763 and book profits at ₹790.

Global trend

The downtrend in nickel (3-month forward) contract on the London Metal Exchange (LME) remains intact. The contract has failed to sustain the break witnessed earlier this month above $11,000 per tonne. It made a high of $11,440 and has come-off from there. It is currently trading at $10,770 per tonne.

Support is at $10,720. As long as the LME-Nickel contract trades below $11,000, there is a strong likelihood of the contract breaking below $10,720 in the coming days. Such a break will drag the contract lower to $10,400 or even $10,000 thereafter.

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

Read the rest of this article by Signing up for Portfolio.It's completely free!

What You'll Get

This article is closed for comments.
Please Email the Editor