Commodity Calls

Near-term outlook is unclear for MCX-Nickel

Gurumurthy K | Updated on March 27, 2019 Published on March 27, 2019

The Nickel futures contract on the Multi Commodity Exchange (MCX) has been consolidating sideways over the last couple of weeks. The contract is stuck in a narrow range between ₹878 and ₹915 per kg over the last two weeks. It is currently trading at ₹896 per kg.

The near-term outlook is unclear. The MCX-Nickel futures contract has a significant support at ₹870 and resistance at ₹915. A breakout on either side of ₹870 or ₹915 will decide the direction of the next move. Traders can stay out of the market until a clear trend emerges.

If the MCX-Nickel futures contract declines below ₹870, it will come under renewed pressure. Such a break will keep the downtrend that has been in place since the beginning of March intact. In such a scenario, a fall to ₹850 and ₹840 is possible going forward.

On the other hand, if the contract manages to breach ₹915 decisively, it can gain fresh momentum. Such a break will ease the downside pressure. In that case, the MCX-Nickel futures contract can move higher to ₹940 and ₹950.

Global trend

The Nickel (3-month forward) contract on the London Metal Exchange (LME) has been oscillating around the psychological level of $13,000 per tonne. The contract has been range bound between $12,800 and $13,370 for almost three weeks now.

The price action and the indicators on the chart leaves the bias bullish for the contract. The 50-day moving average has crossed over the 200-day moving average. This is a bullish signal indicating that the downside could be limited.

This leaves the possibility high of the contract breaching $13,370 in the coming days. Such a break can take the contract higher to $14,000. A further decisive break will increase the likelihood of the contract targeting $16,000 over the medium term.

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

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