Commodity Analysis

MCX-Nickel gears up for a bullish breakout

K Gurumurthy | Updated on October 10, 2018 Published on October 10, 2018

The 21-day moving average is on the verge of crossing over the 200-day moving average.

Nickel futures contract on the Multi Commodity Exchange (MCX) has reversed higher after falling in the initial part of last week. The contract fell toa low of ₹911.7 per kg on Friday last week and managed to recover. The contract surged to a high of ₹963.3 on Tuesday but has come-off slightly from there to the current levels of ₹957 per kg.

A key resistance is at ₹968 which is likely to be tested in the coming days. This resistance has been capping the upside in the contract since July. However, the indicators and the price action on the chart suggest that the contract is likely to breach this hurdle.

Strong bounce back in the past week indicates that the contract is getting fresh buyers around the psychological level of ₹900. The 21-day moving average is on the verge of crossing over the 200-day moving average. These are positive signals indicating that the downside could be limited. It also leaves the possibility high of the contract breaking above ₹968 in the coming days.

Such a break will take the contract higher to ₹990. Further break above ₹990 will then increase the possibility of the rally extending to ₹1,020 and ₹1,050 levels over the medium term. On the other hand, if the contract fails to break above ₹968, a pull back to ₹920 or even lower levels is possible.

In such a scenario, a range-bound move between ₹900 and ₹968 can be seen for some time. The outlook will turn negative only if the contract breaks decisively below ₹900. The next targets are ₹880 and ₹860. However, a fall breaking below ₹900 looks less probable at the moment.

Trading strategy

Medium-term traders can hold the long positions taken at ₹935 and ₹925. Retain the stop loss at ₹890. Revise the stop-loss higher to ₹955 as soon as the contract moves up to ₹975. Book profits at ₹1,025.

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

Published on October 10, 2018

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.