Energy may see profit-taking on higher levels

However, outlook for this week is positive for the counter

Commodity markets witnessed a truncated participation due to the festive season last week. Traded volumes week-on-week was down 12% on the MCX and the focus was on precious metals and energy.

Rising crude prices ensured traders continue with their bias towards flight to safety. The volume topper was silver, which witnessed a robust 23% jump in turnover.

That the price rise was significant, also adds to the optimistic picture. The new week should be a positive period for bullion and energy counters, though some profit-taking may be seen at higher levels.

Agri-commodities

Chana has seen a fortnight of declines as profit taking has reversed the rally that ensued after a breakout past a trendline resistance. Fresh long positions are advocated only above the 2450 mark and support on declines will be at 2300.

Wait and watch for now.

Guarseed has seen a buying support at lower levels as the intra-week buying was not sufficient to stem profit taking. The 1550 level will be the support to watch out for and the 1775 level will be a significant resistance area.

Mentha oil has confirmed a lower tops and bottoms formation as the 450 support has been tested, though not violated as yet.

Unless the 505 resistance is now overcome on significant volumes, avoid new purchases. The outlook for now is negative.

Refined soya oil has overcome the 505 hurdle, albeit on low volumes. It must stay above the 500 mark to retain its rise. Also, open interest should be higher. Till then, wait and watch.

Metals

Aluminium investors should avoid fresh buying unless the 104 hurdle is overcome on forceful volumes. Decline may test the 100 support, which should not be violated if the uptrend is to sustain.

Copper has seen a major decline, especially after the 282 support was violated convincingly.

The downside is open up to the 260-262 levels and no buying is recommended till the 285 resistance is overcome.

Advances will be sell opportunities and will encounter overhead supply. Fresh shorts are advocated on rallies.

Gold has seen a significant upmove. Upsides may see levels of 10800 this week and the 10100 level is the immediate support.

Nickel is showing signs of a sideways consolidation as the 1190-350 band may now be the trading range. Unless a breakout/draw down occurs, fresh positions should be avoided.

Silver has seen a strong move in tandem with crude and bullion. Volumes have been big and the bulls have added positions at lower levels. The 19000-band will be a support and the upside is seen till the 21200 level.

Zinc has shown a confirmed decline and the weekly charts display an inside formation as the 106 level is now the immediate support. Upsides are likely to see resistance at the 112-114 levels.

Upsides are sell opportunities for trapped bulls and overhead supply is likely to be significant.

Energy

Crude oil has seen some profit sales at the higher levels as the 3650 level will now be a support on declines.

It is important for the momentum traders that this threshold not be violated in the immediate future.

The 3750 pivot will be a trigger to watch, above which the bulls take charge.

Natural gas is likely to consolidate as the 325-335 level was scaled. However, profit taking from beleaguered bulls led to a decline and the 290-300 band will emerge as a support area to watch out for.

Avoid fresh buying till a breakout past the previous high is seen on forceful volumes.

(Mandatory disclosure: The analyst has no exposure to any commodity mentioned above.)
vijay@BSPLindia.com