Technical Analysis

MCX-Nickel dips below a key support

Akhil Nallamuthu BL Research Bureau | Updated on March 18, 2020 Published on March 18, 2020

The March futures contract of Nickel on the Multi Commodity Exchange (MCX) has been declining for the past one week after facing the resistance at 50-day moving average price near ₹970. The contract remains below 21- and 50-day moving averages, which is a pointer to bearish outlook. The contract has slipped below the support at ₹900 and marked a lower low on the daily chart. Going ahead, the contract can witness more selling pressure in the near-term.

Corroborating the weak outlook, the Moving Average Convergence Divergence (MACD) indicator on the daily chart, already in the bearish zone, is indicating a renewed bearish momentum. The daily Relative Strength Index (RSI) is showing a fresh downtick and lies below the mid-point level of 50. These factors hint at further decline possibility.

On the downside, the price will most likely fall towards ₹805 as the contract has breached the support at ₹900. Below ₹805, the contract could weaken to ₹783. On the other hand, if the contract manages to reverse the trend, ₹925 will act as a resistance. A breakout of that level can lift the contract price to ₹966. Unless the contract breaches ₹966 decisively, the rallies may not sustain.

On the global front, the price of three-month rolling forward contract of Nickel on the London Metal Exchange (LME) breached the important support of $12,140 last week, opening the door for further weakness. The price also remains below both 21- and 50-DMAs. Thus, in the upcoming sessions, the contract may decline further from current level. The nearest supports are at $11,285 and $11,000.

Trading strategy

Since the contract price of Nickel on the MCX has breached the support at ₹900, the outlook has turned negative. The bearish outlook is also substantiated by the price movement of the forward contract on the LME. Traders can initiate fresh short positions on rallies with ₹930 as stop-loss.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on March 18, 2020
This article is closed for comments.
Please Email the Editor