Commodity Analysis

On the charts

Gurumurthy K | Updated on January 18, 2018 Published on July 31, 2016

PO01_MCX Aluminium.eps

PO01_MCX Copper.eps

PO01_MCX Lead.eps

PO01_MCX Nickel.eps

PO01_MCX Zinc.eps

MCX-Aluminium (₹108)

The MCX-Aluminium futures contract has failed to break above the resistance at ₹112 per kg last month. It made a high of ₹113.55 and has reversed sharply lower to close lower by 2 per cent for the month. Immediate support is at ₹106 . A break below it can take the contract lower to ₹103 or ₹102 in the coming weeks. The level of ₹102 is a strong trendline support, which is likely to halt the fall. A reversal from this support will have the potential to take the contract higher to ₹110 and ₹112 once again. Traders with a short-term perspective can wait for dips and go long on a reversal from the ₹103-102 zone. Stop-loss can be placed at ₹99 for the target of ₹111. Revise the stop-loss higher to ₹105 as soon as the contract moves up to ₹109. The region between ₹112 and ₹113 is a strong resistance for the contract. The contract will gain fresh bullish momentum only on a strong break and close above ₹113. The next immediate target is ₹116. A move above ₹116 opens the doors for next targets of ₹120 and ₹125.

MCX-Copper (₹330)

The MCX-Copper futures contract is facing strong resistance around ₹340 per kg. However, there is strong support in the ₹320-318 zone which can limit the downside. A dip to test this support zone cannot be ruled out. Whether contract reverses higher thereafter or extends its fall breaking below ₹318 will decide the next leg of move. A reversal from ₹320 or ₹318 will see the contract moving to ₹340 once again. Short-term traders with high risk appetite can go long on a reversal from ₹320-318. Stop-loss can be placed at ₹313 for the target of ₹335. Revise the stop-loss higher to ₹325 as soon as the contract moves up to ₹330. A strong break above ₹340 will boost the momentum and take the contract higher to ₹346. If the contract surpasses this hurdle, then the rally can extend to ₹350 or even ₹355. On the other hand if the contract breaks below ₹318, it can fall to ₹315 immediately. Further fall below ₹315 will increase the downside pressure and drag it to ₹305 or even lower thereafter.

MCX-Lead (₹119)

After surging about 8 per cent in the last week of June, the MCX-Lead futures contract managed to sustain higher and remained range bound for most part of July. However, the contract lost momentum last week and fell 2 per cent breaking below the support at ₹122 per kg. This level may now act as a good resistance. The contract is down 4 per cent for the month and the sharp fall last week has turned the near-term view bearish. Any intermediate bounce to test the resistance at ₹122 may find fresh selling interest coming into market. While below ₹122, a fall to ₹115 or even ₹111 looks likely in the coming weeks. There is a key trendline support around ₹111 and the fall halting around this support cannot be ruled out. On the other hand the downside pressure will ease only if the stock manages to break and close above ₹123. But on the charts, such a sharp rise looks less probable in the near-term. Having said this, the contract is more likely to extend its fall in the coming weeks before we see any reversal.

MCX-Nickel (₹700)

The 10 per cent surge in the MCX-Nickel futures contract last month confirms the end of the prolonged consolidation between ₹520 and ₹645 per kg that was in place since November last year. It also suggests that the worst could be over and confirms the reversal of the long-term downtrend that was in place since May 2014. However, the inability to break above the psychological ₹700 level decisively keeps alive the possibility for a near-term corrective dip to ₹675 . The levels of ₹675 and ₹645 are strong supports . Any corrective fall to these levels may find fresh buyers emerging in the market. A strong break and a decisive weekly close above ₹700 will boost the momentum. Then, the contract can rally to test targets of ₹745 and ₹750. A break above ₹750 will see the rally extending to ₹780. Investors with a medium-term perspective can go long on dips near ₹675. Keep the stop-loss at ₹640 for the target of ₹745. Accumulate longs near ₹650 if the contract declines below ₹675.

MCX-Zinc (₹149)

The uptrend in the MCX-Zinc futures contract that has been in place since January remains intact. The contract rose 4.7 per cent last month to close in the green for the fourth consecutive month. Clearly, zinc continues to be the outperformer with a sharp 40 per cent rise so far this year. Immediate support is at ₹145 which has aided in halting the fall last week. As long as the contract trades above this support a rise to ₹155 and ₹157 is possible in the coming weeks. But if the contract declines below ₹145, a fall to ₹140 can be seen. The region between ₹155 and ₹157 is a strong long-term resistance. Given that the contract has had a sharp and continuous rally over the last seven months, the uptrend halting at the above mentioned resistance levels cannot be ruled out. A reversal from there can trigger a corrective fall to ₹145-140 or may be even lower levels. So investors holding long positions should remain cautious and try to book profits around ₹153 or ₹155 levels.

Published on July 31, 2016

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