Nickel and Copper Trading Strategies by Tradebulls Securities
Gold prices remained in the 48,800-49,300 range as investors wait for US economic data, the consumer price index. If the US inflation figures turn out to be higher than expected again, the debate over an early exit of the US Fed from its ultra-expansionary monetary policy could resume, which would have a negative impact on gold as the bond yields would rise with the US dollar. . The rise in commodity prices in recent months is a worrying sign that inflation could become problematic. The momentum of hedge fund speculative positions has started to wane as profit accounting is clearly underway. According to the COT report, gold buying has run out of steam with a long build slowing down to just 2.9,000 lots, a far cry from the 61.3,000 lots bought net in the previous three weeks. The lack of fresh purchases last week could indicate that this initial demand is now being met. In MCX gold has good support around 48,700 and any decline around this level should be used to go long with an expected target of 49,700 and a stoploss of 48,200.
July money bulls in term have the overall technical advantage in the short term. However, a nine week uptrend on the daily bar chart has stopped. Silver bulls need to close above 73,500 for momentum to shift from neutral to bullish. The next bearish price target for bears is to close prices below strong support at 69,800 which is June’s low and would open the doors for bears to gain the upper hand. The first resistance is seen 72,800 then 73,500. Next support is seen at this week’s low of 70,500. Longs on silver have been reduced for a second week so we are seeing an underperformance against gold and are more bullish on gold. gold than silver.
Crude oil prices are trading higher due to the expected increase in demand as economies open and US production lags behind pre-pandemic levels. The decline in drilling and production in the United States leaves little competition for OPEC + ‘s efforts to manage markets. For now, OPEC + has no motivation to increase production more than expected. So he made no indication that more barrels might be coming. OPEC + has reiterated its intention to add some 2 million bpd to its combined production from July, but there is no question of adding more production. Hedge funds increased their net long position in crude oil by 25.2,000 lots to 649.5,000, a three-week high but still some 88,000 below the recent high in February. OPEC’s bullish demand outlook for the second half of the year, combined with the ability of OPEC + groups to control the price, helped push Brent above $ 70 (2-year high) while the WTI hit levels last seen in 2018. We remain bullish on crude oil prices, but one should wait for some downside as prices are already trading at a multi-year high and a strong reserve of earnings cannot be ruled out .
Natural gas prices have recovered as expectations of rising cooling demand are expected, according to the recent weather model. Not only the United States, but European countries are also expected to experience an increase in demand for natural gas for cooling. That being said, we don’t expect natural gas to go above 236 from mid-June, we could see a cold snap coming to the United States. It is likely to stay choppy and we might see more sales if prices drop below 220.
Buy Nickel | TGT: 1,354 | Stop loss: 1,287
Nickel made a ‘harami’ candlestick formation after a sharp red candle, indicating that the selling momentum has subsided. The tracking candles were in green, indicating that buyers are organizing some sort of comeback. Prices are reaching 50-DMA and have now started trading above 20-DMA which is a positive sign. We expect the momentum to continue to 1,354 where nickel has good resistance as in May and June it was unable to break through that level. So buy at the current price with an expected target of 1,354 and a stoploss of 1,287 on a close basis.
Sell copper below 730 | TGT: 710 | Stop loss: 740
Since May, copper has taken support around 733 and 730. Prices have rebounded from these levels indicating that buyers are defending this area. Once that level is crossed on the downside, we can see sellers taking over. The trend is neutral to negative for copper as the RSI_14 is below 50. Prices are trading below 20 DMA and slightly above 50 DMA. We recommend that you take a short position on the July contract below 730 for an expected drop to 710 and a stop loss of 740 on a close basis.
Disclaimer: Bhavik Patel is Senior Research Analyst, Commodities and Currencies at TradeBulls Securities. Opinions are personal.