Commodity Calls

MCX-Nickel tests a key resistance

Yoganand D BL Research Bureau | Updated on January 09, 2018

BL24-NICKEL

The Nickel futures contract on the Multi Commodity Exchange (MCX) has been in an inter medium-term uptrend since taking support in the band between ₹550 and ₹560 a kg in early June 2017. Last week, the contract advanced 3.6 per cent surpassing a key resistance at ₹720. But, the contract encountered next resistance at ₹750 and has been testing this level over last six trading sessions.

On Wednesday, the August contract started the session at ₹745 and rallied higher to mark an intra-day high of ₹750.2, ahead of the derivative expiry. The September month contract started the session at ₹746 and recorded an intra-day high of ₹754.3 levels The September month contract is currently trading at ₹747 levels. With the contract facing difficulty in surpassing the key resistance level of ₹750 and the daily relative strength index displaying negative divergence there is a possibility of a short-term trend reversal in the pipeline. The weekly relative strength index is hovering in the overbought territory. There is also decline in daily volume over the past four trading sessions. The daily indicators are trending downwards and showing signs of weakness.

Hence, traders with a short-term perspective should tread with caution in the coming week. The September month contract can decline and test support at ₹720 in the coming week. An upward reversal from this base can keep the contract moving sideways in the band between ₹720 and ₹750 for a while. But, a plunge below ₹720 can drag the contract down to ₹700 in the short to medium term. Key resistances beyond ₹750 are placed at ₹770 and ₹790

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

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Published on August 30, 2017
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