Commodity Calls

Downtrend intact in MCX-Nickel

Gurumurthy K BL Research Bureau | Updated on November 14, 2018 Published on November 14, 2018

Make use of rallies to go short at ₹830 and ₹845


Nickel has been in a strong downtrend since June. This downtrend has gathered momentum since October. The futures contract on the Multi Commodity Exchange (MCX) has tumbled over 15 per cent from around ₹963 per kg in early October to the current levels of ₹813 per kg.

The contract has declined decisively below the key ₹850-₹860 support zone in the past week. The sharp fall below ₹850 has intensified the downtrend. The region between ₹850 and ₹860 will now serve as a strong resistance and restrict the upside in the contract.

A fall to ₹790 looks likely in the near term. If the contract manages to bounce from this support, a corrective rally is possible. However, such an intermediate bounce will face resistance in the ₹850-₹860 region. An eventual break below ₹790 will then increase the likelihood of the contract tumbling to ₹760 and ₹750 in the coming weeks.

The MCX-Nickel futures contract has to breach ₹860 decisively for the downside pressure to ease. In that case, it can target ₹900. But such a strong upmove looks unlikely at the moment.

On the global front, the outlook for Nickel on the London Metal Exchange (LME) is also negative. The LME-Nickel (3-month forward) has been struggling to rise past the psychological level of $12,000 per tonne over the last several days. It is currently trading at $11,345 per tonne. Resistance is in the $11,500-$11,700 region. As long as it trades below this zone, a fall to $11,000 is likely in the near term.

Trading strategy

Traders with a medium-term perspective can make use of rallies to go short at ₹830 and ₹845. Stop-loss can be placed at ₹875 for the target of ₹765. Revise the stop-loss lower to ₹810 as soon as the contract moves down to ₹790.

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