Trading strategies for zinc and nickel by Tradebulls Securities – Business Standard

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On the daily scale, Zinc has witnessed a crossover of 20 and 50 EMA, suggesting fresh sign of bullishness

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Markets | commodity outlook | commodity trading

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Nickel has witnessed breakout from the range of 1,078-1,042 with volume

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Recently, seemed to have found strong support at $1,870. The recent rally in US Dollar was because of dwindling stimulus deal optimism. In the absence of geopolitical catalysts, prices may continue to follow the direction of the US Dollar (DXY) and drift alongside risk sentiment. From a longer-term perspective, however, prices are still supported by the overall macro environment (ultra-low interest rates) and ample liquidity conditions, even as short-term consolidation is underway. The options data indicate that traders are heavily leaned towards long side seeing 74 per cent of net long position while 23 per cent are net shorts. Compared to last week, retail traders have reduced their short positions by 9 per cent and added long position by 3 per cent.

The fundamentals of silver are looking positive in the long term as solar installation will help silver prices. Currently, out of total industrial demand, solar panels attribute to 17 per cent of Silver. When silver prices declined in March, ETF was not declining which showed that smart money are bullish. I expect any near-term weakness to remain short-lived. All the fundamental and technical drivers are in place to push gold and silver much higher in the months and years ahead. The next support for Silver is 59,400 which was recent swing low made on October 7.

Brent crude is likely to trade in the range of $38-$43 until the November 3 election. With Norway strike ending and production restarting in Gulf of Mexico, oil prices have corrected from 3,000 level. The rebound in Chinese import gave some tail winds to crude oil yesterday. There isn’t strong compliance from OPEC members as in the month of September, there was decrease of just 47,000 bpd. That’s better than a production increase, but the market was hoping for more. China bought very less crude in September but now has no choice but to increase crude buying by the beginning of November unless it wants to keep drawing down storage. Brent is around $40 so they wont draw from their inventory and they will start buying from the beginning of November.

The recent surge in Natural Gas was on account of storm in Gulf of Mexico. Typically, the beginning of the withdrawal season comes in early November, right after Election Day. It is no surprise that natural gas daily historical volatility is sitting around the 80 per cent level. Inventories have already risen above last year’s pre-peak season high of 3.732 tcf. President Trump and Republicans favor the status quo which would keep prices under check.

Recommendations

Buy | TGT: 199 | Stoploss: 190

On the daily scale, has witnessed a crossover of 20 and 50 EMA, suggesting fresh sign of bullishness. Momentum oscillator ADX has given buy crossover with strength indicator trading above 50 indicating trending market. RSI_14 is also quoting above 55 confirming the bullish trend. We recommend going long at current price with expected target of 199 and stoploss of 190 on a closing basis.

Buy | TGT: 1,135 | Stoploss: 1,080

has witnessed breakout from the range of 1,078-1,042 with volume. The recent breakout confirms bullish trend as we have also seen cross over of 20 and 50 EMA on daily scale. Momentum oscillator ADX is quoting above 58 and RSI_14 is trading at 58, both confirming trending market and bullish bias. has also made rounding bottom chart pattern whose next resistance comes around 1135. So we recommend long positions with target of 1,135 and stoploss of 1,080.


Disclaimer: Bhavik Patel is Sr. Technical Analyst (Commodities) at Tradebulls Securities. Views are personal.

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First Published: Thu, October 15 2020. 08:05 IST