Commodity Calls

MCX-Nickel trades above key support level

Akhil Nallamuthu BL Research Bureau | Updated on September 18, 2019 Published on September 19, 2019

The price of September expiry futures contract of Nickel on the MCX moderated throughout the past week. In the last five trading sessions, after recording a high of ₹1,284.2 a kg, it declined to a low of ₹1,196.7, down 6.8 per cent. Though it traded briefly below the key level of ₹1,200, the price recovered and is currently trading above that level.

The 21-DMA at ₹1,208 levels is providing a base to the contract. As long as the price stays above this level, chances are low for further depreciation. On Wednesday, the contract was largely trading flat, oscillating between ₹1,217.8 and ₹1,226.7, after opening the session at ₹1,217.8. It closed flat at ₹1,213.6.

If the contract continues to moderate and break below ₹1,208 on closing basis, the price can dip towards the key level of ₹1,200. Immediately below that level, support is at ₹1,190 — the 61.8 per cent Fibonacci retracement level of the previous bull trend. On the upside, it faces resistance at ₹1,225. If this level is decisively breached, the bullish trend will regain momentum and rise to ₹1,263.

The three-month rolling forward contract of Nickel on the London Metal Exchange has broken below the range between $17,375 and $18,850 and corrected to $17,000 — an important psychological level. If the contract slumps below this level, it will find support at $16,700 — the 61.8 per cent Fibonacci retracement level of the previous uptrend. But, if the price takes support and bounces from the current levels, the contract may rise to $17,375.

Trading strategy

Though the price of the MCX-Nickel futures contract has corrected, there is yet no confirmation of a trend reversal. Hence, it is advisable to maintain a bullish bias and buy on dips with stop-loss below the support at ₹1,190, and look for ₹1,263 on the upside in the medium term.

Published on September 19, 2019
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