Commodity Calls

Uptrend likely to extend in MCX-Nickel

Yoganand D | Updated on August 05, 2020

The August futures contract of nickel on Multi Commodity Exchange (MCX) has been in a medium-term uptrend, forming higher peaks and higher troughs, since April this year. The short-term trend is also up for the contract. Recently, the contract breached a key resistance at around ₹1,060 and continued to trend northwards. It is currently trading at ₹1,081.

The contract can now face crucial resistance ahead at ₹1,100, which is also a psychological barrier. A decisive break above this level can push the contract northwards to ₹1,120 and then to ₹1,150 over the short term. The contract trades well above its 21- and 50-day moving averages. The relative strength index is featuring in the bullish zone, indicating bullish momentum.

On the other hand, key immediate support at ₹1,060 can provide a base for the contract. A sharp slump below this level can extend the corrective decline on the profit-booking and selling interest. In that case, the contract can test subsequent support at ₹1,040 levels. A decisive plunge below this base can alter the short-term uptrend and drag the contract down the next key support level of ₹1,015 and ₹1,000.

On the global front, the price of the three-month rolling forward contract of nickel on London Metal Exchange (LME) has been charting northwards since early April. Further, the contract had conclusively breached a key hurdle at $13,760 and continued to trend upwards. The near-term outlook is bullish. Resistances are $14,000 and $14,200. Supports below $13,760 are at $13,500 and $13,200.

Trade Strategy:

As the MCX-Nickel contract is trading northwards in line with the LME price, the outlook is bullish for the contract. It can extend the up-move to ₹1,100 in the ensuing trading session. Traders can buy the contract with a stop-loss at ₹1,060 levels.

Published on August 06, 2020

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