The nickel futures contract on the Multi Commodity Exchange (MCX) is under pressure. The contract slumped over 7 per cent in the past week to record a low of ₹677.8 per kg.
The rebound witnessed on Tuesday failed to sustain and the contract had reversed lower again after making a high of ₹707.7/kg. It is currently trading at around ₹694.
The 200-day moving average support is at ₹666 which is likely to be tested this week. A break below this support may drag the contract lower to ₹640 thereafter. The region between ₹640 and ₹630 is a strong support zone which may halt the contract’s current downtrend.
A reversal from the ₹640-₹630 support zone will take the contract higher to ₹660-₹670 initially. A further break above ₹670 will pave way for a test of ₹700.
On the other hand, if the contract manages to reverse higher from the 200-day moving average support at ₹666 itself in the coming week, it can see a corrective bounce to ₹700 or ₹715.
Traders may want to stay out of the market ahead of the New Year.
Watch the price action in the coming week which may give a cue on the next direction of the move and then take trades accordingly.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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