Commodity Calls

Bias turns negative for MCX-Nickel

Gurumurthy K Updated on October 24, 2018

The Nickel futures contract on the Multi Commodity Exchange of India (MCX) seems to lack strength. The contract bounced higher after making a low of ₹895 per kg on October 18 but the up-move was short-lived.

The contract has fallen over 2 per cent from the high of ₹928.1 it clocked on Monday and currently trades at ₹904 per kg.

The 21-day moving average resistance at ₹928 has halted the bounce-back move and has triggered a reversal. This leaves the bias negative on the charts. There is a strong likelihood of the contract falling to ₹880 in the coming days. A further break below ₹880 will then increase the possibility of the down-move extending to ₹870 or even ₹865.

The region around ₹865 and ₹863 is a crucial support. If the contract manages to bounce from this support zone, a relief rally to ₹880 and ₹900 is possible. But a strong break below ₹863 will bring renewed pressure and increase the likelihood of the contract tumbling to ₹810 and ₹800 levels. As such the price action around the ₹865-₹863 region will need a close watch.

The downside pressure will ease only if the contract breaks decisively above the 21-day moving average resistance. In that case the contract can move up to ₹950 and ₹960 levels again. But such a strong upmove looks less probable at the moment.

Trading strategy

Traders can exit the long positions taken at ₹935 and ₹925.

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

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