Commodity Calls

Corrective rally likely in MCX-Nickel

Gurumurthy K BL Research Bureau | Updated on October 31, 2018 Published on October 31, 2018

The Nickel futures contract on the Multi Commodity Exchange of India (MCX) extended its fall breaking below the psychological level of ₹900 per kg as expected in the past week. The contract tumbled 4 per cent intra-week and hit a low of ₹855.6 on Tuesday. However, it has bounced slightly higher and is currently trading at ₹861 per kg.

The contract is taking support at ₹855. As long as it remains above this support, there is a strong likelihood of seeing a corrective rally to ₹880 and ₹885 in the near term. If the contract manages to breach ₹885 decisively, then the relief rally can extend to ₹900 and ₹910 over the short term.

On the other hand, if the contract reverses lower from ₹885, a fresh leg of down-move is possible. In such a scenario, the downtrend that began in early October will remain intact. This fresh leg of down move will increase the likelihood of the contract breaking below the support level of ₹855. Such a break can then drag the contract lower to ₹810 and ₹800 levels.

Trading strategy

High risk appetite traders can make use of rallies and go short at ₹870 and ₹880. Stop-loss can be placed at ₹905 for the target of ₹800. Revise the stop-loss lower to ₹860 as soon as the contract moves down to ₹845.

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

 

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