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After taking support at around ₹645 per kg, the nickel futures contract on the Multi Commodity Exchange (MCX) had gained 6.8 per cent in the previous week.
This rally has formed a bullish engulfing candlestick pattern in the weekly chart that implies reversal in the short-term trend.
Moreover, the contract has breached its 21 and 200-day moving averages in the previous week. However, the contract encountered a key resistance at ₹700 last week and it continues to test with an upward bias.
On Wednesday, the contract slightly breached this resistance by gaining 1 per cent to trade at around ₹704.
An emphatic close above ₹700 will reinforce the short-term uptrend that commenced from the recent low of ₹637.
Traders with a short-term perspective can buy the contract with a stop-loss at ₹685. The contract can extend its rally and test resistance at ₹720 in the coming weeks which is the immediate key resistance level. Further breakthrough of ₹720 can take the contract higher to ₹740 in the medium term. Significant immediate support is placed at ₹680.
A fall below this level can bring back selling pressure and pull the contract down to ₹665 and then to ₹645-650 range in the short-term.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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