Technical Analysis

MCX-Nickel bounces up from a crucial support

Gurumurthy K BL Research Bureau | Updated on January 09, 2019 Published on January 09, 2019

The Nickel futures contract on the Multi Commodity Exchange of India (MCX) has bounced up sharply in the past week. The support in the ₹735-730 per kg zone held very well. The contract made a low of ₹736.9 on January 2 and has reversed higher from there. The contract has surged over 7 per cent from the low and is currently trading at ₹793 per kg.

The upward reversal in the past week is significant technically as it has happened from the key 200-week moving average support. The price action in the coming days will need a close watch to determine whether the current bounceback move is a trend reversal or just a corrective rally.

Key resistances are at ₹800 and ₹810 which are likely to be tested in the near term. Whether the contract breaks above ₹810 or not will decide the next direction of move. Inability to breach ₹810 can pull the contract lower to ₹790. A further break below ₹790 will then increase the likelihood of the contract extending its downmove to ₹770 and ₹760.

On the other hand, if the MCX-Nickel futures contract manages to breach ₹810 in the coming sessions, it can gain fresh momentum. Such a break will pave way for the next target of ₹850.

Global trend

The Nickel (three-month forward) declined breaking below the crucial support level of $11,000 per tonne. However, the contract has reversed higher again after making a low of $10,525. It is currently trading at $11,180.

An immediate resistance is at $11,350. A strong break above it can take the contract higher to $12,000. On the other hand, if the LME-Nickel contract reverses lower from $11,350 and declines below $11,000, a fall to $10,700 is possible. A break below $10,700 can then drag it to $10,000 over the medium term.

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

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