Commodity Calls

Go long on MCX nickel futures

Akhil Nallamuthu | Updated on October 25, 2021

Place stop-loss at ₹1,450

Since July, the price band of ₹1,535 and ₹1,550 had been blocking the continuous contract of nickel on the Multi Commodity Exchange (MCX) from moving beyond these levels. But a week ago, the contract managed to break out of this resistance band and marked a fresh high of ₹1,635.5 last week. Following this, there was a price drop, and the contract is currently trading around ₹1,550. Notably, the price band of ₹1,535 and ₹1,550 has now turned support post the breakout.

The 50-day moving average lies at ₹1,450, and as long as the contract lies above this, the trend will remain bullish biased. This is corroborated by the relative strength index (RSI) and the moving average convergence divergence (MACD) on the daily chart as they continue to stay on their respective positive territory. Thus price correction may not extend below ₹1,450. The contract will most likely resume the uptrend from the current levels and could retest the prior high of ₹1,635. A decisive break out of this level can lift the contract to ₹1,700 in the following weeks.

Hence, traders can consider going long (November futures) at the current level of ₹1,550 and add long if the price moderates to ₹1,505. Place initial stop-loss at ₹1,450. Liquidate 50 per cent of the position when the price appreciates to ₹1,635. Shift the stop-loss upwards to ₹1,540 and look to exit the remaining at ₹1,700.

 

Published on October 25, 2021

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