Stocks

MCX-Nickel: Go long above ₹1,125

Akhil Nallamuthu BL Research Bureau | Updated on September 16, 2020 Published on September 17, 2020

The September futures contract of nickel on Multi Commodity Exchange of India (MCX), which has been in an uptrend since June, registered a high of ₹1,158.4 in the first week of September. But the contract reversed the trend and declined to register a low of ₹1,081 last Friday, before recovering to the current level of ₹1,115.

Since the contract remains above the key support of ₹1,072, the overall trend will be inclined to bullish.

Following the price recovery in the past few trading sessions, the daily relative strength index, which was moving downwards, is now showing a fresh uptick and has crossed over the midpoint level of 50. The moving average convergence divergence indicator on the daily chart, which is tracing a downward trajectory, is now showing signs of a recovery.

 

The contract, currently hovers at ₹1,115 and faces roadblock ahead at ₹1,125. If price strengthens above that level, it will most likely retest its prior high of ₹1,158.4 and a break out of that level can take the contract to ₹1,200. But if the contract weakens, it has a support in the band between ₹1,085 and ₹1,072. A breach of ₹1,072 can turn the outlook negative, potentially dragging the contract to ₹1,040.

On the global front, the three-month rolling forward contract of nickel on London Metal Exchange, that saw its price go below the critical support of $15,000, has now recovered above that level. Thus, the contract looks bullish as it continues to retain the higher high – higher low price pattern and it is likely to rally from current levels. A rally can positively impact the contract on MCX.

Trading Strategy

The price action of the contract on MCX is hinting at a recovery where the contract is likely to advance from here. However, it faces a hurdle at ₹1,125. Hence, traders can stay on the fence now and go long with stop-loss at ₹1,080 if the contract price breaks out of ₹1,125.

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Published on September 17, 2020
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