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The downtrend in the Nickel futures contract on the Multi Commodity Exchange (MCX) that was in place since the first week of September had halted in the past week.
The contract made a low of ₹665.5 per kg on September 27 and has reversed higher from there. It has surged about 6 per cent from this low and is currently trading at ₹704.
The bounce-back move in the past week signals that the corrective fall that had begun from the high of ₹786 made in the first week of September has come to an end. Support is in the ₹693-₹690 zone which is likely to limit the downside in the near-term.
As long as the contract trades above this support zone, the outlook will remain positive. An upmove to test the immediate resistance at ₹711 is likely in the near- term. A strong break above this hurdle will pave way for the next targets of ₹723 and ₹726. Short-term traders with a high-risk appetite can go long on dips at ₹695.
Stop-loss can be placed at ₹685 for the target of ₹720. Revise the stop-loss higher to ₹703 as soon as the contract moves up to ₹710. The bullish outlook will get negated only if the contract declines below ₹690.
In such a scenario, the possibility of the contract falling to ₹665 or even lower levels will increase.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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