Commodity Calls

Short-term view negative for MCX-Nickel

Gurumurthy K BL Research Bureau | Updated on September 05, 2018 Published on September 05, 2018

Nickel prices have been under pressure for the last few weeks. After hitting a high of ₹969.5 a kg on August 9, the futures contract has tumbled over 7 per cent and currently trades at ₹897 per kg on the MCX.

The fall has dragged the contract decisively below a key support level of ₹920. Moreover, the contract hovers below the 200-day moving average and the outlook is negative. But, an intermediate bounce to above ₹900 is likely to bring in selling pressure at higher levels. The resistance at ₹920 is likely to cap the upside. A fall to ₹870 or ₹860 is likely in the coming days.

A bounce from the ₹870-₹860 support zone can then trigger a corrective rally to ₹900. But if the MCX-Nickel futures contract breaks below ₹860 decisively, the downside pressure will increase. In such a scenario, there is a strong likelihood of the contract tumbling to ₹820 or even lower levels over the medium term.

The contract will get a breather from the downtrend only if it breaks above ₹920 decisively. Such a break can then take it higher to ₹950 and ₹960 levels again.

Trading strategy

Short-term traders can make use of rallies to go short at ₹905 and ₹915. Stop-loss can be placed at ₹925 for the target of ₹875. Revise the stop-loss lower to ₹898 as soon as the contract moves down to ₹889.

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

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