Technical Analysis

Uptrend gains momentum in MCX-Nickel

Gurumurthy K BL Research Bureau | Updated on January 30, 2019 Published on January 30, 2019

The Nickel futures contract on the Multi Commodity Exchange of India has risen sharply in the past week as expected. The contract has rallied over 5 per cent in the past week, breaking above the key 100-day moving average resistance level of ₹839 per kg. The MCX-Nickel futures contract is currently trading at ₹872 per kg.

There is a key trendline resistance near current levels at ₹873. Inability to breach this hurdle can trigger a pull-back move towards ₹850 or ₹840. However, the overall outlook will continue to remain positive. As such, the downside is expected to be limited. The region between ₹845 and ₹840 will serve as a strong support and thus fresh buyers are likely to emerge around this support zone.

As such an eventual break above ₹873 will then increase the likelihood of the contract extending its upmove to ₹900 or even ₹920 in the coming weeks.

Traders with a medium-term perspective can wait for dips and go long at ₹855 and ₹845. Stop-loss can be placed at ₹820 for the target of ₹915. Revise the stop-loss higher to ₹870 as soon as the contract moves up to ₹885.

Global trend

The uptrend in the Nickel (three-month forward) that has been in place since the beginning of the year is gaining momentum on the LME. The contract has surged over 10 per cent so far and is currently trading at $12,120. The contract has breached and closed above the key resistance level of $12,000 on Tuesday.

The outlook remains bullish. Immediate support is at $12,000 and the next significant support is at $11,730 — the 100-day moving average. A rally to 12,550 is likely in the coming days.

The outlook will turn negative only if the LME-Nickel contract declines decisively below $11,730. The next target is 11,450. But such a fall breaking below $11,730 looks less likely at the moment.

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

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