Commodity Analysis

Commodity Top Five

Akhil Nallamuthu | Updated on September 08, 2019 Published on September 07, 2019

MCX Crude (₹4,054)

September futures contract of crude oil continues to trade within the consolidation range between ₹3,845 and ₹4,075. The contract opened the week flat at ₹3,958 against its previous close of ₹3,952, and declined to the lower limit of the range. The price appreciated from there on the back of favourable inventory data. However, it could not decisively break above the upper limit of the range, and closed the week at ₹4,054. The contract is expected to extend its consolidation phase. In the event of its price breaking above the range’s upper limit, the contract will rise towards the resistance band between ₹4,200 and ₹4,220. Beyond those levels, it has the potential to appreciate towards ₹4,350 in the near term. On the other hand, if selling pressure increases, the contract can head to ₹3,845 levels. A break below that level can take the contract down to ₹3,650 over the medium term.

MCX Gold (₹38,553)

October futures contract of gold closed the week on a flat note, giving away its intra-week gains. The contract recorded a lifetime high of ₹39,885 on Wednesday before declining to the support at ₹38,600, where the 21-day moving average is placed. The Relative Strength Index shows weakness. Also, one can observe a trend-reversal candlestick pattern in the form of an evening star in the daily chart. All this points to a potential reversal in trend. Thus, the contract may fall towards the support at 37,620, a break below which could intensify the bearish trend, and the price could drop to ₹36,730 levels. This level is also the 61.8 per cent Fibonacci retracement level of the previous trend and the dynamic 50-day moving average, which makes it a significant support. Alternatively, if the price bounces from the current level, it can face resistance between ₹39,885 and ₹40,000 levels.

MCX Silver (₹47,885)

December futures contract of silver gained in the first half of the week, registering an all-time high at ₹51,489. However, in the latter half of the week, the contract faced selling pressure and tumbled, posting a marginal loss for the week. The contract was unable to close above the important psychological resistance of ₹50,000. The price plummeted 3.2 per cent in Friday’s session alone, and the contract has found a support at ₹47,540 in the 38 per cent Fibonacci retracement level of the previous bullish trend. Also, silver futures lost 7 per cent, whereas gold futures contract weakened by 3.3 per cent from their respective all-time highs. Assuming that the support at ₹47,540 level holds, the contract will rise towards ₹49,000 levels. However, if the contract breaks the support, it can decline to ₹46,800, the 21-day moving average. Further sell-off may drag the price towards ₹45,800 levels.

MCX Copper (₹453.35)

September expiry futures contract of copper broke out of the range between ₹434.40 and ₹452.20 that had been holding for over a month. The contract opened on a weak note as it declined to a low of ₹437.30 on Tuesday after opening the week at ₹441. However, it recovered sharply and pierced through the resistance band of ₹450-₹452.20, and closed at ₹455.45 on Thursday, confirming the breakout backed by good volumes. On Friday, the price action was flattish, and it was more of a retest of the broken resistance levels. It closed the week with a 2.65 per cent gain. Since ₹455 is an important level on a weekly basis, a close above that level will take the contract towards ₹470 in the near term if the bullish momentum sustains. Alternatively, if the price retracts below ₹450, negating the breakout, the contract may fall towards the lower bottom of the range at ₹434 levels.

NCDEX Chana (₹3,988)

September futures contract of chana opened at ₹4,005 and declined to make a low of ₹3,922 before recouping some of its losses by gaining 1.4 per cent on Friday and closing the week on a flat note. The contract has been on a strong downtrend since mid-August when it declined from ₹4,325 by breaking below the 21-day moving average. Also, the commodity contract has broken below an important support of ₹4,000, paving the way for further weakness. However, the Relative Strength Index shows bullish divergence, calling for caution. If the contract appreciates and moves above ₹4,000, it can face an immediate resistance at ₹4,050 level. Above that level, it has the potential to move to ₹4,200. On the other hand, if the weakness persists, the contract can test the support at ₹3,900. A further fall in price will drag it towards ₹3,800 over the medium term.

Published on September 07, 2019
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