BL Research Bureau

The spot price of Nickel on the MCX broke below the consolidation range last week. It dropped and hit a six-month low of ₹922 on the daily chart on Monday. Thus, further weakness is highly likely.

Following the spot price, the February futures contract of Nickel on the MCX too breached the lower limit of the range between ₹1,005 and ₹1,050 last week. The contract has been on a decline since then. On the daily chart, the price action continues to form lower peaks and lower troughs — a bearish indication.

The daily RSI continues to fall in tandem with the contract price. It also remains below the mid-point level of 50. The MACD indicator on the daily chart further extends into the negative region, hinting substantial downward momentum.

The contract can weaken on account of above reasons. Moreover, the price has formed lower lows and the major trend remains bearish. On the downside, the nearest support is at ₹900. A break below that level can drag the contract price to ₹870. On the other hand, if the contract recovers from current level, it will face its first resistance at ₹960. Beyond that level, the resistance is at ₹1,000, where 21-day moving average coincides.

On the global front, the price of three-month rolling forward contract of Nickel on the London Metal Exchange (LME), as on MCX, has resumed its bear trend and has formed a new low. The contract has breached the key support at $13,000. With current market price at $12,550, the immediate support can be seen at $12,000. Below that level, there is a support band between $11,630 and $11,725.

Trading strategy

The bear trend in MCX-Nickel seems to have resumed and the price trend on the LME indicates the same. Hence traders are recommended to initiate fresh short positions on rallies with ₹1,000 as stop-loss.

 

comment COMMENT NOW