Commodity Calls

Sideways trend likely in MCX-Nickel

Akhil Nallamuthu BL Research Bureau | Updated on October 09, 2019 Published on October 09, 2019

The three-month rolling forward contract of Nickel in London Metal Exchange is supported by $17,000 levels   -  istock.com/kievith

The Nickel continues to consolidate sideways for over a month. The October expiry futures contract of Nickel is fluctuating between ₹1,200 and ₹1,285 a kg. The contract moved past the 21- day moving average (DMA) and is currently trading at ₹1,258 and the month-to-date return stands at 3.5 per cent.

Price action suggests that that contract has formed a key base in the band between ₹1,200 and ₹1,205 — the 23.6 per cent Fibonacci retracement level. As long as those levels hold, the commodity can be approached with a bullish bias.

Holding on the bullish bias, if the commodity contract breaks out of ₹1,285, it will face a hurdle at ₹1,315 and beyond that it could move further towards ₹1,370 over the medium term. On the other hand, if the price breaks below the support band between ₹1,200 and ₹1,205, there could be a change in medium-term trend and the contract could weaken to ₹1,138. Before that, the contract might find support at ₹1,180 levels — the 50-DMA.

Global trend

The three-month rolling forward contract of Nickel in London Metal Exchange is supported by $17,000 levels as there is buying support whenever the price reaches $17,000. There has been an uptick in price since the beginning of the month and if the buying gains traction, it will face resistance in the band between $18,000 and $18,135 on the upside, beyond which it could retest the 52-week high at $18,850. Alternatively, a break below $17,000 could change the medium-term trend to bearish one where the contract could be dragged to $16,385.

Trading strategy

MCX-Nickel is on a marginal rise since the beginning of the month. However, unless its breaks above ₹1,285, the rallies in-between might not be sustainable. Hence, traders are recommended to stay on the sidelines until either of ₹1,200 or ₹1,285 is decisively broken.

Published on October 09, 2019
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