Showing posts with label Technical Analysis. Show all posts
Showing posts with label Technical Analysis. Show all posts

Wednesday, March 11, 2015

MCX aluminium (₹111.85/kg): Sell

MCX aluminium (₹111.85/kg): Sell
Aluminium has tumbled some 16 per cent since November last year. The global spot aluminium price recorded a high of $2,099 per tonne in November and fell to $1,765 . Declining demand for the metal due to the global slowdown, especially in China, has taken the aluminium price sharply lower.

Aluminium futures on the Multi Commodity Exchange (MCX) which move in tandem with the global price have tumbled about 15 per cent in the same period. The contract has been consolidating sideways since January within its overall downtrend. It is likely to extend its fall in the coming weeks, making it advisable to initiate fresh short positions.
Short-term view: Aluminium futures have been range-bound between ₹110 and ₹117 a kg since January. The 200-week moving average, currently at ₹110.5, is providing support for the contract. Though the sideways range remains intact at the moment, the price action on the daily chart suggests that the range is likely to be broken on the downside in the coming days.
Immediate resistance is at ₹113.5. Key short-term resistance is at ₹117 – which is the upper end of the current sideways range in which the contract is trading now. The short-term outlook is bearish as long as the contract trades below these resistances. A strong break below the support ₹110 can drag the contract lower to ₹106 in the short-term.
Traders with a short-term perspective can initiate fresh short position at current levels. Stop-loss can be placed at ₹114 for the target of ₹106. The outlook will turn bullish only on a strong break above ₹117. The next target is ₹118.5.
Medium-term view: The medium-term trend view is also bearish with key resistance at ₹118.5. The contract can fall to ₹104. Medium-term traders can go short with a wider stop-loss at ₹116 and for the target of ₹105. Intermediate rallies to ₹115 if seen can be used to accumulate short positions.
The level of ₹104 is a key medium-term trend-line support for the contract which has the potential to halt the current downtrend. A reversal from here can take the contract higher to ₹115 once again.

Sunday, February 22, 2015

Copper Technical Outlook

Copper got a bit of press attention recently with headlines of a plunge in price. This was in early January and I hadn't looked at the copper chart for a few days and I was gobsmacked when I did. A plunge they say?! What a load of baloney!! If that was a plunge then they are in for a big shock later this year if my analysis is correct.
But let's not get ahead of ourselves. Let's start with the small picture and then come back to the big picture which will reveal the likely shock in store.


Copper Daily Chart

Copper Daily Chart
The recent low was a "three strikes and you're out" low consisting of three consecutive lower lows. This low was also accompanied by triple bullish divergences on the Relative Strength Indicator (RSI) and Stochastic indicator. This generally leads to a significant rise and while price has risen from that low the nature of the rise is nothing to rave about.
Price has so far failed to take out the January 2015 high at US$2.65 which is denoted by the lowest horizontal line. Taking this into consideration, I believe price may be headed for a fourth lower low which is also accompanied by quadruple bullish divergences on the same lower indicators. That occurring really should lead to a substantial rally. Let's see.
The Bollinger Bands show price bouncing up to the upper band and perhaps one last move back to the lower band is in store before a decent rally takes place.
Other points of resistance are denoted by the higher horizontal lines which stem from the December 2014 low and December 2014 high and I favour any coming rally to take out these levels.
Now let's skip to the monthly chart to begin examining the bigger picture.


Copper Monthly Chart

Copper Monthly Chart
The RSI and Stochastic indicator are both in oversold territory so a rally should be on the cards shortly. However, both these indicators have readings showing new lows so any rally from here is likely to be a bear market rally. I would like to see the final low be accompanied by bullish divergences on the lower indicators.
I have drawn an Andrew's Pitchfork which shows price trending down within the upper channel of this bearish pitchfork. If a rally is to take place soon then I am looking for price to test the upper channel line. And considering I expect a bear rally only then price should be rejected at this upper trend line.
So where is the final low likely to be?
I have drawn a green highlighted circle which shows where price exploded higher in a parabolic move. This area is at the 2008/09 lows of US$1.27. Price plunged into that low and them immediately launched higher in explosive style. Price often eventually corrects to these areas and I favour exactly that to play out here.
I have added Fibonacci retracement levels of the move up from 2001 low at US$0.60 to the all time high in 2011 at US$4.65. I am looking for a deep retracement that closes in on the 88.6% level at US$1.06 which would see price clipping the zone whereby price launched higher parabolic style.
Price putting in a low there around mid 2016 would also be at support from the middle trend line of the Andrew's Pitchfork.
Let's now look at the yearly chart to get another perspective.


Copper Yearly Chart

Copper Yearly Chart
The recent high in 2011 showed a bearish divergence on the RSI and Stochastic indicator. These indicators now appear to be trending down and not looking particularly promising for the bulls.
I have added the same Fibonacci retracement levels from the monthly chart just to give a different perspective.
I have also added a Fibonacci Fan which shows the 2008/09 low was around support given from the 76.4% angle. I am looking for the next major low to clip the 88.6% angle. Time will tell.
If I am reading this correctly, then a massive 5 point broadening top is in play and price is now headed down to make a point 4 low. In this scenario, the 2006 high was point 1, the 2008/09 low point 2, the 2011 high point 3. If we do indeed get a point 4 low then I expect price to once again explode to new all time highs over the coming years as price eventually puts in the point 5 high.
And I'd like to see the final point 5 high be accompanied by triple bearish divergences in the lower indicators.
So while the move down in early January garnered some headlines, it really wasn't a major plunge. The real plunge is still to come. And expect much bigger headlines to come with it!

Author: Austin Galt

Wednesday, November 5, 2014

MCX-lead (₹123.3/kg):Buy

MCX-lead (₹123.3/kg):Buy


The lead futures contract traded on the Multi Commodity Exchange (MCX) advanced one per cent on Monday to ₹125/kg. Since bottoming out from the December 2008 low of ₹40, the metal has been on a long-term uptrend.
However, the contract encountered a key long-term resistance (October 2007 peak) at ₹155 in August 2014 and started to decline. With this up move one-leg of the contract's uptrend appears to have come to an end. The contract has been on broad sideways consolidation phase in the range between ₹121 and ₹140.
Short-term view: In early August, the contract encountered resistance at ₹140 which the upper boundary of the sideways consolidation phase and began to decline. The short-term trend has been down since then.
Nevertheless, the significant long-term support in the band between ₹120 and ₹121 halted the metal's decline in mid-October. Subsequently, the contract started to change direction triggered by positive divergence in the daily relative strength index as well as moving average convergence divergence indicator.
The daily RSI is moving higher in the neutral region towards the bullish zone. Further the daily MACD has signalled a buy.
As the contract is reversing higher from a significant support band with positive bias, we take a contrarian bullish stance on the contract in the short-term. The contract can extend its progressing up move in the coming week and reach the price target of ₹130 initially and then to ₹133. Traders with a short-term perspective can buy the contract and also accumulate in declines with a stop-loss at ₹120 levels.
Medium-term view: The medium-term outlook is sideways in the broad band between ₹121 and ₹140 for the MCX-lead futures contract. It is reversing from the lower boundary. A decisive rally above ₹130 can take the contract northwards to the upper boundary of ₹140 in the medium-term.
However, decisive close below the ₹120 will alter the sideways trend into bearish and pull the contract down to ₹115. In that scenario, investors should exit the long positions and stay on sidelines.

Wednesday, September 3, 2014

MCX-zinc (₹144): BUY

MCX-zinc (₹144): BUY

The zinc futures contract traded on the Multi Commodity Exchange (MCX) has rallied strongly over the last three months.
The contract has risen over 17 per cent from ₹122.4 a kg in May to ₹144. Increase in demand coupled with a sharp fall in inventories is supporting the price rise.
According to the data from the International Lead and Zinc Study Group, , the market for zinc ran into a deficit for the first time in 2013 after many years.
Also, the deficit has widened to 2,34,000 tonnes in the first half of this year, which is much higher than the 94,000 tonnes deficit recorded for the entire 2013. Widening deficit is expected to limit the downside and could push the price further higher in the coming weeks.
Moving in tandem with the global zinc price, the MCX-zinc futures contract witnessed a sharp rally in the months of June and July. Subsequently, this rally took a pause and the contract has been on corrective consolidation since August.
The price action in the last two weeks of August suggests that the consolidation could be nearing its end. The contract appears to be gearing up for a fresh leg of up move.
This offers traders with a short-term perspective a good opportunity to initiate fresh long position in the contract.
Short-term view: The short-term outlook for the MCX-zinc futures contract is bullish.
The contract’s corrective fall from the August high of ₹146.95 found support at ₹137.6 – the 38.2 per cent Fibonacci retracement level.
An upward reversal from this support level has thereby kept the uptrend intact. The 21-day moving average level at ₹142 is the immediate support for the contract. Key short-term support is at ₹137.6. There is no danger for the short-term bullish outlook as long as the contract trades above this level. Resistance is at ₹147. A strong break above this level can take the contract higher to ₹155. Traders with a short-term horizon can initiate fresh long position at current levels. Stop-loss can be kept at ₹136 for the target of ₹154.
The short-term outlook will turn negative if the contract falls below ₹137.6 decisively. The ensuing target on such a fall will be ₹130.
Medium-term view: The medium-term outlook is also bullish for the contract. It has been trading in a bull channel for more than a year. Key medium-term support is at ₹130 which is also the channel support level.
While the contract trades above this level, a rally to ₹163 is possible over the medium-term. Traders with a medium-term perspective can consider holding their long positions with a wide stop-loss at ₹129 for the target of ₹162.
Intermediate declines to ₹130, if happens can be considered for accumulating long positions.
The medium-term outlook will be mitigated if the contract records a strong close below ₹130. The next target will be ₹121.

Wednesday, August 27, 2014

MCX-Lead (₹136.9): BUY

MCX-Lead (₹136.9): BUY
The price of the metal lead, which finds its major usage in batteries, has risen sharply since May. The lead futures contract traded on the Multi Commodity Exchange (MCX) has surged 10 per cent from ₹123/kg in May to ₹137 now.
According to the data from the International Lead and Zinc Study Group (ILZSG), the market for lead ran into a deficit in 2013 for the first time in the last few years. The deficit is expected to widen in 2014 to 50,000 tonnes from a deficit of 1,000 tonnes in the previous year. Slow-down in mine production, increase in demand and widening deficit could limit any fall in the lead price and keep the current up trend intact. This provides a good opportunity for both the short- and medium-term traders to go long in the MCX-lead futures contract.
Short-term view: The short-term outlook is bullish. The fall from the high of ₹140.75 recorded on August 5 found support at ₹133.5, the 38.2 per cent Fibonacci retracement level. The contract has reversed higher from this level thereby reversing the downtrend. Resistance is at ₹139. A strong break above this level can take the contract higher to ₹142.
Traders with a short-term perspective can initiate fresh long position now. Stop-loss can be placed at ₹134 for the target of ₹141.
Immediate support for the contract is at ₹135 and then the key short-term support is at ₹133.5. The outlook will turn bearish only on a strong break below ₹133.5. Such a break can take the contract lower to ₹130 in the short-term.
Medium-term view: The medium-term outlook is also bullish for the MCX-lead futures contract. The recent rally since June has decisively reversed the strong downtrend that was in place since the August 2013 high of ₹155.4. Also this reversal has happened upon forming a double bottom reversal pattern. The neckline support of this pattern is at ₹130. As long as the contract trades above this level, a rally to ₹148 looks likely in the medium-term.
Traders with a medium-term perspective can hold the long position with a wide stop-loss at ₹129 for the target of ₹147. Intermediate declines to ₹134 and ₹130 if seen can be considered for accumulating more long positions.
The medium-term outlook will turn bearish if MCX lead futures contract declines below ₹130. The ensuing target will be ₹120.
Business Line

Thursday, August 14, 2014

MCX-copper: Hovers at a key support level

As expected, the copper futures contract traded on the Multi Commodity Exchange (MCX) has dropped in the last week. However, the contract is still retaining its ₹424-439 a kg sideways range within which it has been trading since July. It is currently hovering near the lower end of this range. Whether the range support at ₹424 is going to hold or getting broken will decide the next leg of move for the contract.
A sharp reversal from ₹424 will mean that the ₹424-439 range would remain intact. It will also increase the probability of the contract moving higher to ₹439 – the upper end of the range in the coming days. In such a scenario upon a reversal, traders with a short-term perspective can initiate fresh long position at ₹425. Stop-loss can be kept at ₹419 for the target of ₹437.
On the other hand, a break below ₹424 will turn the short-term outlook bearish. It will result in the MCX-copper extending its decline to ₹420. This level of ₹420 is a key support level. An immediate break below this level might not be very easy. The overall outlook will turn bearish for the contract only on a strong fall below this level. There is no immediate danger for the medium-term bullish view as long as the contract trades above ₹420.

hindubusinessline

Wednesday, August 13, 2014

MCX-nickel (₹1,159): BUY

MCX-nickel (₹1,159): BUY
It has been a good year so far for Nickel. Indonesia banning the exports of unprocessed nickel ore and bauxite in January this year has helped the metal price to surge. The price on the London Metal Exchange is up 34 per cent so far this year.
The domestic nickel futures contract traded on the Multi Commodity Exchange (MCX) that moves in tandem with the global price is also up 34 per cent over the same period. This uptrend remains intact. So, traders with a short- and medium-term perspective can consider taking long position in this contract.
Short-term view: The MCX-nickel futures contract is consolidating sideways between ₹1,110 and ₹1,175 a kg over the last few weeks. A breakout on either side of this range will decide the next leg of move for the contract.
Within the range, the contract is now moving higher from the lower end of this range in the last two weeks. This leaves open the possibility of a rise towards ₹1,175, the upper end of this range in the coming days. Since the preceding trend is up, the bias is bullish.
The contract can witness a strong break and rise above ₹1,175 in the coming days. Such a break can take the contract higher to ₹1,220 in the short-term. Traders with a short-term perspective can initiate fresh long position now. Stop-loss can be kept at ₹1,005 for the target of ₹1,210.
The short-term outlook will turn bearish only if the contract records a decisive break below ₹1,110. But such a break looks less probable because the ₹1,110 level is a strong support. Both the 21-week and the 100-day moving average levels are poised at this level. So declines below ₹1,110 might not be very easy at the moment. However, if the contract falls below ₹1,110 then it can fall to ₹1,080 in the short-term.
Medium-term view: The medium-term outlook for the MCX-nickel futures contract is bullish. The sharp fall in the contract from the high of ₹1,280 recorded in May has reversed in June from the low of ₹1,047.3. Technically, this reversal has happened from just below the 50 per cent Fibonacci retracement support level of ₹1,050. This keeps the overall uptrend that began in January intact. Resistance for the contract is at ₹1,225. A strong break above this level will open the doors for a rally to ₹1,300 over the medium-term. So traders with a medium-term perspective can hold the long position with a slightly wider stop-loss at ₹1,090 for the target of ₹1,280.
The psychological level of ₹1,100 will be a key support for the contract now. A strong break below this level will negate the chances of an immediate rise to ₹1,300 and can drag the contract lower to ₹1,050 instead.
hindubusinessline

Tuesday, August 12, 2014

Rally in zinc set to stall

Rally in zinc set to stall
Chinese smelters increase production to take advantage of bull run

With a gain of over 20 per cent in the last 12 months, zinc is one of the top five gainers among ferrous and non-ferrous metals in the commodities market. But it is unlikely that zinc will make much headway over the next few months.
One of the reasons for the rally to stall will be rising supply especially with China increasing the output to benefit from the high prices that are prevailing now. A sign of things to come could possible be last week’s fall in zinc prices by four per cent.
Price forecast
On Monday, zinc fell below $2,300 a tonne to $2,295 for delivery in November. From the weekend closing, the drop was $34.
BNP Paribas sees zinc averaging $2,205 in the October quarter and $2,270 in the last quarter. Currently, cash zinc prices are ruling at $2,332 and they are expected to drop to levels of $2,090 this year, according to analysts. Next year, prices could rise to $2,244.
Last week, price fell mainly because London Metal Exchange inventories increased by over five per cent to 6.91 lakh tonnes. It was biggest rise in a week after April. Inventories have also increased in China.
Speculation
Ironically, zinc zoomed because stocks are down by 2.41 lakh tonnes a year. So, what has changed now that the zinc’s progress could be halted?
According to Hermes Fund Managers Ltd, stocks in Chinese warehouses are rising. Reuters quoted Joseph Murphy, analyst with Herms Fund, as saying that the metals market is seeing drawdown in LME stocks but at the same time warehouse stocks are on the rise.
Zinc smelters will get better returns for producing more, which could result in the metal prices being dented.
Hermes said refined zinc demand will exceed supply by 2.5 lakh tonnes this year and 2 lakh tonnes next year, according to BNP.
Traders on LME say that speculation in zinc is ending by shifting to other metals such as aluminium, nickel and lead.
Funds have cut their bearish bets to 39,368, according to LME commitment of traders data, down from over 40,000 in the last week on July.
Copper fallout
Murphy said that ample supplies of zinc concentrate and higher charges for treating apart from surging domestic prices should encourage smelters in China to boost zinc output.
Zinc is also gaining because a probe by Chinese officials revealed that copper is being used as a financial tool. This has moved speculators and hedge funds to zinc on the Shanghai Futures Exchange.
The increasing interest in zinc is supported by Chinese data showing rise in imports to 68,476 tonnes in June, a six-month high. In comparison, copper imports have been dropping since April.
The problem with copper and aluminium is that Chinese authorities suspect that stocks of these metals have been offered as collateral manifold by a multi-national firm owned by a Singaporean.
But now with stocks tending to rise, some traders have taken their foot off the accelerator, while others have begun to cash in their position.
Some commodity brokerages have told their clients to hold back investments of zinc since it had run up too fast.
A drop in prices of zinc, used mainly for steel galvanising, means India could tend to gain as domestic rates are based on 15-day LME average.
hindubusinessline

Lead up on supply concerns

Lead up on supply concerns
Increase in demand and widening deficit to support price rise
Lead prices on the LME have risen 9.5 per cent since March, led by a slowdown in mine production and a relatively higher demand. Lead is used largely in car batteries. About 80 per cent of the metal is used in the lead acid batteries used in vehicles.
According to data from Bloomberg, the number of lead-acid batteries in newly assembled passenger and light vehicles is projected to go up 4.8 per cent in 2014 to 86.82 million. The pick-up in the global automobile sector is a big plus for the lead market.
In the domestic market too, lead futures on MCX have been moving up. Traders who have a medium-term outlook can go long on the contract.
Demand outstrips supply

Demand for refined lead, which was up just 0.4 per cent in 2012, surged 7 per cent in 2013 to 11.22 million tonnes. This year, the International Lead and Zinc Study Group (ILZSG) forecasts demand to increase over 4 per cent to 11.73 million tonnes.
China, the world’s largest consumer of lead, is expected to show a large appetite for the metal. Though the country’s lead consumption in the first four months of this year (January-April) is down 10 per cent, ILZSG forecasts it to rise 7.4 per cent for the full year.
Supply, however, is going to be tight. The global output of lead from mines is expected to rise by just 5 per cent in 2014 after a 7.6 per cent increase in 2013, says the ILZSG, widening the deficit in the market.
From a 1,000-tonne shortage in 2013, deficit in lead in the first four months of this year has widened to 12,000 tonnes. The ILZSG estimates the shortage to widen to 50,000 tonnes in 2014. Increasing deficit will help lead prices crawl up.
India relies largely on imports to meet its domestic lead demand. Data from the Ministry of Commerce show that after two consecutive years of a fall in imports from 2010-11, lead imports surged 25 per cent in 2012-13 and 2 per cent in 2013-14.
A weak rupee could keep domestic lead prices higher this year with the metal’s futures price broadly tracking international prices.
Technical outlook

Medium-term view: The medium-term outlook for the MCX-lead (₹137 per kg) futures contract is bullish. The strong downtrend that was in place since August 2013 reversed last month.
Also, as this reversal has happened after forming a double bottom pattern between March and June this year, the chart looks very bullish now. The neckline support of this pattern is at ₹130.
The bullish outlook will remain intact as long as the contract trades above this level. Intermediate dips to this support level may attract fresh buying interest.
So traders with a medium-term perspective can go long on the contract at current levels. More long positions can be accumulated at ₹135 and ₹132 if an intermediate pullback is seen. Stop-loss can be kept at ₹127 for a target of ₹150.
The medium-term outlook will turn bearish only if the contract falls decisively below ₹120. The ensuing target on such a break will be ₹115.
Short-term view: MCX lead is in a strong uptrend in the short-term perspective as well.
The contract has consolidated in the form of a triangle in the last week of July and has witnessed a bullish breakout last week.
Immediate support for the contract is at ₹136. The 21-day moving average at ₹134 is a key short-term support for the contract. Above this level, a rally to ₹145 looks likely in the short term.
The outlook will turn negative only if the contract records a strong close below the 21-day moving average level.
The targets on such a break will be ₹130.

hindubusinessline

Wednesday, August 6, 2014

MCX-aluminium (₹122.5): BUY

MCX-aluminium (₹122.5): BUY
The aluminium futures contract traded on the Multi Commodity Exchange (MCX) has been going through a strong uptrend since May. The contract has risen some 21 per cent from its low of ₹101.25/kg recorded in May. A fall in global production coupled with an increase in demand for the metal has helped this commodity to vault higher.
On the global front, the spot price of aluminium on the London Metal Exchange has surged 15 per cent from its May low of $1,714 a tonne to $2,013. The outlook is bullish with strong support at $1,850.
A rally to $2,100 in the short-term and $2,200 or may be even higher levels in the medium-term looks likely now. The MCX-aluminium which moves in tandem with the global price is also expected to rise. This offers a good buying opportunity in MCX-aluminium for traders.
Short-term view: The short-term trend in the MCX-aluminium futures contract is up. The price action between July 22 and July 30 suggests a formation of a bull flag pattern within the overall uptrend.
The sharp rise on Monday signals the beginning of a new leg of up move in the contract. Immediate supports for the contract are at ₹122 and ₹120.5. While the contract trades above these support levels, there is no immediate downside threat.
Traders with a short-term perspective can initiate fresh long position at current levels. Stop-loss can be kept at ₹120 for the target of ₹128.
The 21-day moving average at ₹119 is a key short-term support for the contract. The outlook will turn bearish only if the contract records a strong close below this level. The ensuing target in such a scenario will be ₹117.
Medium-term view: The medium-term outlook is bullish for the MCX-aluminium futures contract.
The strong down-trend that was in place since August 2013 has got reversed decisively.
Additionally the contract has breached an important trend-line resistance at ₹122 this week. A strong weekly close above this level this week could reinforce the bullish momentum.
Key medium-term support for the contract is at ₹114.
A rally to ₹132 looks likely in a medium-term time frame. The outlook will turn bearish if the contract declines below ₹114.
In such a scenario the contract can decline to test ₹102.
hindubusinessline

Friday, August 1, 2014

USD-INR Breakout

USD-INR Breakout

USD-INR Breakout, Resistance at 61.02, 61.52, 61.80, 62.50. Support 60.50, 60.70.

Thursday, July 31, 2014

Nifty Futures Could Top Around 7910 And Fall To 7600

Nifty Futures Could Top Around 7910 And Fall To 7600

Nifty Futures Could Top Around 7910 (1st August) And Fall To 7600 (6th August)

Every 18th Day Nifty Is Topping Out (BLUE LINES)
Since Election Day
Every 16th Day Nifty Is Bottoming (RED LINES)

Dow Breaks 6 Months Trendline

Dow Breaks 6 Months Trendline

Dow Targets 16250, With Stop Loss Of 17000

Wednesday, May 7, 2014

Indian Rupee (USD-INR) May 2014

Indian Rupee (USD-INR) May 2014 Graph, Chart

Should Not Close Below 59.95 .

Else Next Target 59.11. Three Consecutive Closes Could Take Currency Further Down To 57.80.