Technical Analysis

Downtrend comes to a halt in MCX-Nickel

BL Research Bureau | Updated on March 20, 2019 Published on March 20, 2019

The downtrend in the Nickel futures contract on the MCX that had been in place over the last two weeks seems to have come to an end. The contract made a low of ₹878.6 per kg on Monday and has bounced up sharply from there. The contract has surged over 3 per cent from the recent low and is currently trading at ₹908 per kg.

A key near-term resistance is at ₹917 — the 21-day moving average. A strong break above this hurdle will ease the downside pressure. Such a break will then take the contract higher to ₹937. A further break above ₹937 will then increase the likelihood of the contract targeting ₹950 or ₹955 over the short-term.

The region between ₹950 and ₹955 is a crucial medium-term resistance. Whether the contract manages to breach this resistance zone or not will determine the direction of the next move. A strong break and close above ₹955 will pave way for the next targets of ₹1,000 and ₹1,050 over the medium-term.

On the other hand, if the MCX-Nickel futures contract fails to break the ₹950-955 resistance zone and reverses lower, a fall initially to ₹935 is possible. A further break below ₹935 will then increase the likelihood of the contract extending its fall to ₹920 or even ₹900.

Global trend

The Nickel (three-month forward) contract on the LME has been oscillating around $13,000 per month for more than two weeks. It is currently trading at $13,149 per tonne.

The price action on the daily chart indicates bullish bias. A near-term resistance is at $13,370. A strong break above this hurdle will increase the likelihood of a fresh rally to $14,000.

The level of $12,800 is a key support and the outlook will turn negative only if the contract declines below this support.

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

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