Commodity outlook and trading ideas by Bhavik Patel - Sr. Technical Analyst (Commodities), Tradebulls.
US-China Truce on tariffs have weakened dollar index but US dollar again gained after Brexit turmoil. We expect DXY to trade in the positive region. Meanwhile, our currency has bottomed out near 69.70 and now we are expecting to depreciate till 72 as uncertainty will linger as state election results are near. RBI policy failed to lift the currency and now it is buying on dips instead of sell on rising.
Gold is near to its resistance zone of $1248 in COMEX, thanks to 10 yr US yield trading below 3%. The falling interest rate is good news for gold. The only headwind for gold is strong US dollar. In MCX, we expect Gold to outperform back on a weak rupee and strong gold performance in COMEX. 31400-31500 is the level we expect Gold to test next week. Silver continues to underperform compared to gold as a short position in COMEX is high so clearly, investors still believe silver is expected to remain muted.
Crude oil prices are still down near $60 on oversupply and expectation of a slowdown in the economy. Qatar’s exit from OPEC has not much impacted crude oil prices but today’s OPEC meeting is the trigger which crude oil bulls would be looking for. Any cut above 1,00,000/day would boost crude oil prices otherwise expect it to trade in sideways. Crude oil still is in an oversold region and the bounce it got from $58 to $62 has not enough legs to carry forward. Once again crude rally has stalled and now this OPEC event will be a key trigger for the price.
Target: Rs 820
Stop loss: Rs 760
Nickel has made rounding bottom on the daily scale. The currency was underperforming compared to other base metals. We are seeing some sort of recovery in base metals and now Nickel has also started gaining momentum. After making base near 752, Nickel has recovered smartly. RSI_14 still is under 40 but momentum indicator has started showing strength. Nickel is trading above its 13 EMA and near to its 20 EMA. The moving average has started curving upwards so we expect Nickel to move till 820 and maintain a stop loss of 760.
Buy Natural Gas
Target: Rs 345
Stop loss: Rs 288
Natural Gas after the spectacular rally has gone into sideways. Partly the reason is that weather forecast is warm for first half of December but we expect winter to pick up at the end of the calendar year. Natural Gas is forming base near 300. Current price action is not formidable for taking long position but one should wait for some dip near 310-305. Natural Gas is trading above 13 and 20 EMA and is making a higher low on the daily scale indicating bullish trend still is in play. We expect Natural Gas to touch levels of 345 so buy near 310-305 for a target of 345 and stop loss of 288.
Disclaimer: The analyst may have positions in any or all the commodities mentioned above.