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The commodity market looked mixed last week as most base metals traded with a bullish bias and the bullions ended a little lower. But the most active group was energy commodities with crude oil price falling by about 10 per cent over the past week.
Since crude oil is the biggest component of the iCOMDEX composite index on the Multi Commodity Exchange of India (MCX), the decline in its price dragged the index lower — it posted a loss of 1.3 per cent and closed below the 10,000 mark. This trend is likely to continue during the upcoming sessions.
MCX-Crude (₹2,642)
The November futures contract of crude oil on the MCX opened last week with a gap-down and continued to fall through the week.
It slipped below the prior low of ₹2,798 and marked a fresh low of ₹2,606. The price action is clearly bearish, and the contract is likely to decline further.
Affirming the downtrend, the daily relative strength index (RSI) has been on a decline along with the price, whereas the moving average convergence divergence (MACD) indicator on the daily chart has turned its trajectory downwards.
Considering the above factors, traders can be bearish and initiate fresh short positions on rallies with a stop-loss at ₹2,800. From the current level, the price is likely to drop to ₹2,560.
Below that level, it could decline to ₹2,460. Resistance from the current level are at ₹2,720 and ₹2,800.
MCX-Gold (₹50,699)
The December futures contract of gold on MCX extended the sideways trend last week as well.
The contract has largely been trading in between ₹50,000 and ₹51,400 for the past four weeks.
Unless either of these levels are breached decisively, the short-term trend will remain uncertain. Nevertheless, the major trend is bullish, and as long as the contract trades above ₹50,000, the long-term uptrend will stay so.
Since the trend has been largely flat recently, the RSI and MACD are flat.
Though the major trend is bullish, traders can stay on the fence and wait for the contract to breach ₹51,400 before initiating fresh longs — buy the contract with a stop-loss at ₹50,000 if it breaks out of the resistance at ₹51,400. In this case, the contract is likely to rally to ₹52,300. The subsequent resistance is at ₹53,500. A notable support below ₹50,000 is at ₹49,300.
MCX-Silver (₹60,865)
Similar to gold futures, the December futures of silver on the MCX has been treading a horizontal path for the past four weeks. It has been oscillating between ₹60,000 and ₹64,000 since early October; unless the contract moves out of the range, the next leg of trend cannot be confirmed.
But as long as the price is above ₹57,500, the major trend will be inclined to be upward.
Following the sideways price movement, the RSI and the MACD indicators are flat.
Given the aforementioned factors, traders can stay on the sidelines for now. Initiate fresh long positions on the contract with a stop-loss at ₹60,000 if it breaks out of the resistance at ₹64,000.
Above this level, the price is likely to rise towards the resistance of ₹66,000. The subsequent resistance is at ₹67,500. Support from the current levels can be spotted at ₹60,000 and ₹57,500.
MCX-Copper (₹526.4)
The November futures contract of copper on MCX was sluggish last week and was oscillating within a tight range of ₹525 and ₹534.
The 21-day moving average (DMA) coincides with the support of ₹525, making it a good base; likelihood of a rally will be high until the price stays above this level.
However, there are a few indications that say otherwise.
That is, the daily RSI has been moving downwards gradually and the MACD indicator has shifted its trajectory downwards. These indications do not augur well, and a breach of the support at ₹525 can result in a sharp fall.
Given the above factors, traders can initiate fresh short positions with a stop-loss at ₹534 if the contract decisively breaches the support of ₹525.
Below this level, the contract could drop to ₹518 and subsequently decline to ₹510.
NCDEX-RM Seed (₹6,083)
Post the breakout of the resistance of ₹5,550, the November futures contract of mustard seed (RM seed) on the National Commodities and Derivatives Exchange (NCDEX) has been rallying with substantial positive momentum.
The uptrend looks strong as the contract continues to form fresh highs and is well above the 21-DMA.
Moreover, it closed above the ₹6,000-mark last week, strengthening the case for the bulls. Corroborating the bullish outlook, the daily RSI is showing a renewed uptick and the MACD indicator on the daily chart has been steadily moving up over the past two weeks.
Considering the above factors, traders can be bullish and go long on the contract on declines with stop-loss at ₹5,850.
On the upside, the contract is likely to rally to ₹6,200 and possibly to ₹6,300.
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