Commodity outlook by Tradebulls Securities: Sell copper, nickel

Commodity outlook and trading ideas by Bhavik Patel - Sr. Technical Analyst (Commodities), Tradebulls.

Gold is witnessing some normal, healthy, corrective consolidation after prices on July 19 soared to six-year high. Until July, 31st (US Fed meeting), we expect gold prices to oscillate between $1440-$1400 and would move according to the US data. Traders and investors' main focus would be on European Central Bank (ECB) and the US Fed. We might see some correction in gold and then a pull back after the ECB hinted at an additional accommodative policy which has made EURO weaker and Dollar stronger and by extension Gold weaker. But any accommodative policy is positive for metal so we may see rally later on in gold.

Silver speculators sharply boosted their bullish bets after 2 dull weeks. We continue to prefer silver against gold currently as silver has still catching up to do. Since the past 4-5 trading sessions, silver is outperforming gold and any dips have been bought into. We expect the trend to continue till end of this month. Silver bulls next upside target would be to break levels of $17 while next support is seen at $16. Silver’s rally may come under threat if bears can extend decline below $15.835.

Crude Oil saw some sell off even though fundamentals do point to strong crude oil prices. Persian Gulf tension and the highest US withdrawal inventory of 2019 have failed to lift prices which indicate that the market is more worried about demand scenario than supply scenario. Crude oil is well supplied so any increase in demand or more serious flare in US-Iran tension may boost crude oil prices. We feel crude oil will see breakdown if Brent crude breaches below $62 level. Crude oil is expected to trade in a range and not going anywhere atleast for next week. With the International Energy Agency last week announcing another cut to its 2019 global demand growth forecast and OPEC also singing the same tune, we expect build up in stocks and crude oil prices to remain muted during the rest of 2019.

Recommendation:
 

Sell Copper | TGT 438 | Stoploss 458

Copper has been trading in a range of 458-440 in July. After making a high of 461.60, prices have been falling steadily with every rise giving more opportunity for sellers to create new positions. Next support comes around 438 so we expect copper to drift towards 438 before any long positions can be taken. As long as 458 is not taken out, bears will have firm control. This high made of 461.60 was ‘bullish belt hold’ candlestick pattern and failure to sustain above that level indicates exhaustion by bulls. So sell with expected downmove till 438 and stoploss of 458 closing basis.

Sell Nickel below 978 |TGT 940 | Stoploss 1019

Prices of Nickel have rapidly accelerated and have been to overbought zone when RSI_14 came to 84 before prices retracing back. At present, RSI_14 is at 61 on a daily scale but the prices are still too far from near term moving average of 21 and 50. Mean reversion should be happen which means prices may come near its short term moving average. Technically, Nickel has support around 978 and breach below that level only triggers selling pressure. At present, the trend is neutral to positive so we would recommend shorting only below 978 for expected down move till 940 and stoploss of 1019 closing basis.

================================================

Disclaimer: The analyst may have positions in any or all the commodities mentioned above.