Technical Analysis

MCX-Nickel likely to extend the rally

Akhil Nallamuthu BL Research Bureau | Updated on December 25, 2019 Published on December 26, 2019

The recovery in the December futures contract of Zinc on the Multi Commodity Exchange of India (MCX) seems to be gaining momentum as it continued to rise in the past week. The price breached the resistance at ₹1,038 and has formed a higher peak on the daily chart — an indication of further appreciation. Also, the contract has closed above the 21-day moving average, turning the near-term outlook positive.

Corroborating the bullish bias are the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) indicator on the daily chart. The RSI is rising in tandem with the contract price, implying that the uptrend has a considerable momentum in its favour. It has also inched above the midpoint level of 50. Similarly, the MACD is pointing upwards, an indication of a good bullish strength.

Currently, trading around ₹1050, the contract might face a resistance at ₹1,055. If the contract rallies past ₹1,055, it will most likely rise towards the resistance at ₹1,076. Subsequent resistance is at ₹1,100. On the other hand, if the contract weakens from current levels, it will find support at ₹1,038. Below that level, the support level is at ₹1,020 which coincides with the 21-day moving average.

The price of three-month rolling forward contract of Nickel on the London Metal Exchange (LME) broke out of the key resistance level of $14,000, opening the door for further strengthening. The contract has a minor resistance at $14,675, above which the resistance is at $15,000. In case if price drops, $14,000 can act as a substantial support.

Trading strategy

Though MCX-Nickel futures seems to be bullish with several factors supporting, but it faces a resistance at ₹1,055. Hence, from the perspective of trading, it is advised to wait for the contract to close above ₹1,055 on a daily basis before initiating long positions with a stop-loss at ₹1,035.

(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)

Published on December 26, 2019
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