Technical Analysis

MCX-Nickel continues its upward trend

Yoganand D BL Research Bureau | Updated on February 20, 2019 Published on February 20, 2019

The Nickel futures contract on the MCX has been on a medium-term uptrend since taking support at ₹735 per kg in early January. However, the contract encountered a key resistance at ₹956 in early February. After two weeks of corrective fall, the contract found support at ₹856 last week and bounced up strongly.

Forming a bullish engulfing candlestick pattern at the key support level of ₹860, the contract resumed its medium-term uptrend. Moreover, the 21-day moving average also cushioned the contract.

On Wednesday, the contract gained 1 per cent breaching a key resistance at ₹900 as well as the 200-day moving average line and trades at ₹908 per kg. With this rally the corrective fall appears to have come to an end. Besides, a decisive rally above the key level of ₹900 strengthens the medium-term uptrend.

The contract can continue to trend upwards and test resistances at ₹922 and then at ₹950 in the ensuing weeks. An emphatic break above the significant medium-term resistance level of ₹950 will reinforce the bullish momentum and accelerate the contract northwards to ₹970 and ₹1,000 in the medium-term. On the other hand, key supports are placed at ₹860 and ₹840. Only a decisive break below ₹840 will increase the likelihood of the contract declining to ₹810 and ₹800 levels over the medium-term.

Traders with a high-risk appetite can make use of declines to go long with a fixed stop-loss at ₹880 levels. Targets are ₹922 and ₹950 levels.

Global trend

The Nickel (three-month forward) contract on the LME took support at around $12,080 and has bounced up recently. The contract faces key resistance ahead at $12,800 and $13,000. A conclusive break above these barriers will strengthen the up-move and take the contract higher to $13,350 levels. Key supports are at $12,300 and $12,000.

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

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