Technical Analysis

MCX-Nickel likely to extend the rally

Akhil Nallamuthu Akhil Nallamuthu | Updated on June 10, 2020 Published on June 11, 2020

The June futures contract of nickel on the Multi Commodity Exchange (MCX) rallied throughout last week. The contract closed in the green for three consecutive weeks, ending at ₹974.7 last Friday. The price now is well above the 21-day moving average (DMA), indicating a strong upward momentum. The contract will be bullish as long as it remains above ₹945.

Corroborating the bullish bias, the daily RSI has been moving up, currently rules above the midpoint level of 50. Also, the moving average convergence divergence (MACD) indicator on the daily chart has been in an upward trajectory and is now in the bullish region.

On the back of the prevailing bullish bias, the contract is more likely to appreciate from current levels. The contract might rally to ₹1,000 in the forthcoming trading sessions. That level can act as a strong hindrance. A breakout of that level can lift the contract to ₹1,025. But if the contract weakens, it might find support at ₹945 — its 21-DMA. Subsequent support is at ₹900, and a break below this level can trigger a substantial sell-off.

On the global front, the three-month rolling forward contract of nickel on the London Metal Exchange (LME) has been rallying since last week. The contract broke out of the important resistance level of $13,000 and has now moderated slightly. Nevertheless, the trend is bullish and the contract has been forming higher highs and higher lows. Because of the bullish inclination, the contract might move up in the forthcoming days. This can have a positive impact on the contract on MCX.

Trading strategy

The metal seems to be in an uptrend, as indicated by the contract on the LME and the MCX. Moreover, MCX-Nickel now rules above an important level. As long as it stays so, the likelihood of a rally is high. So, traders can buy the contract on declines with stop-loss at ₹900.

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

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Published on June 11, 2020
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