Commodity Calls

MCX-Nickel on a corrective fall

Gurumurthy K BL Research Bureau | Updated on February 13, 2019 Published on February 13, 2019

The uptrend in the Nickel futures contract on the Multi Commodity Exchange of India (MCX) that has been in place since the beginning of this year has come to a halt. The contract has fallen sharply in the past week. The resistance at around ₹956 per kg is limiting the upside. The contract made a high of ₹956.4 on February 6 and has plummeted over 9 per cent, breaking below the psychological support level ₹900. The contract is currently trading at ₹869 per kg.

The corrective fall is likely to remain in place in the coming days. There is a strong likelihood of the contract extending its fall towards ₹839 – the 100-day moving average support level. Whether the contract reverses higher from ₹839 or not will decide the direction of the next move. A bounce from ₹839 will see the contract revisiting ₹900 levels. But a break below ₹839 will increase the likelihood of the fall extending towards ₹810 and ₹800.

The bias continues to remain positive and the 100-day moving average support is likely to provide base for the corrective fall and trigger an upward reversal.

Trading strategy

Traders with a high-risk appetite can go long on dips at ₹835. Stop-loss can be placed at ₹815 for the target of ₹885. Revise the stop-loss higher to ₹845 as soon as the contract moves up to ₹855.

Global trend

The Nickel (3-month forward) contract on the London Metal Exchange (LME) has come-off sharply after making a high of $13,350 on February 6. The contract has tumbled 7 per cent from this high and is currently trading at $12,410 per tonne. Key resistance at around $13,300 has held well and has triggered a reversal.

The near-term view remains negative. The LME-Nickel contract can fall to $12,000 or even $11,950 in the coming days.

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

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