Commodity Calls

MCX-Nickel likely to head north

Akhil Nallamuthu BL Research Bureau | Updated on July 29, 2020 Published on July 29, 2020

MCX-Nickel (₹1,036)

The August futures contract of nickel on Multi Commodity Exchange (MCX) bounced sharply by taking the support at the psychological level of ₹1,000 where the 21-day moving average coincides. Notably, the trend remains bullish and the contract has been forming higher peaks and higher troughs since April.

But the price level of ₹1,040 is acting as a hindrance and the contract should breach this level for the bulls to gather fresh momentum. On the other hand, a consolidation can open the door for a correction.

As the trend points upward, the indicators as well are in favour of the bulls at this stage. The moving average convergence divergence indicator on the daily chart is in the bullish region and charting an upward trajectory. The relative strength index is above the midpoint level of 50, giving it a bullish bias.

Because of the above factors, the contract might rally past the resistance at ₹1,040. In that case, it can appreciate to ₹1,075 in the near term. Above that level, it can advance to ₹1,100. But if the contract fails to breach ₹1,040 and comes down, the immediate supports are at ₹1,015 and ₹1,000. A break below ₹1,000 can turn the outlook negative, possibly dragging the contract to ₹965.

On the global front, the price of three-month rolling forward contract of nickel on London Metal Exchange (LME) is in an uptrend since the beginning of April. Consequently, the contract formed a fresh high last week as it crossed above $13,500, indicating the possibility of further extension in the uptrend. The rally can positively impact the contract in MCX.

Trade Strategy:

The strong bounce off the support at ₹1,000 last week indicates a strong bull trend in MCX-Nickel. Also, globally the price of the metal has been on a rise. So, traders can go long in the contract on declines with stop-loss at ₹960.

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Published on July 29, 2020
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