The nickel futures contract traded on the Multi Commodity Exchange has risen sharply by 9 per cent from its low of ₹1,047.3 a kg recorded on June 12.

The outlook is bullish and it offers short-term traders a good chance to initiate long position in this contract.

Short-term view: The sharp 18 per cent fall in the contract from the high of ₹1,280 recorded on May 12 found a bottom at ₹1,047 in June. Though the contract declined below the 50 per cent Fibonacci retracement support level at ₹1,055.2 in June, it subsequently reversed higher.

This up move has turned the short-term outlook bullish. Although the contract is hovering just below its immediate resistance at ₹1,150, the probability of breaching this level is high in the coming trading sessions.

A strong break above ₹1,150 can take the contract higher to ₹1,190 which is the next significant resistance level for the contract. Short-term traders can go long now with a stop-loss at ₹1,110 for the target of ₹1,185.

Immediate support for the contract is pegged at ₹1,115 – the 21-day moving average and then at ₹1,105 – a trend-line support level. The short-term bullish outlook will be negated only if the contract records a decisive close below ₹1,100. The ensuing target on such a break will be ₹1,050.

Medium-term view: The medium-term trend is up for MCX-nickel futures contract. The contract has a key trend-line resistance at ₹1,224.

This level was breached in the month of May, but the contract failed to sustain above ₹1,224. The contract had reversed lower after recording a high of ₹1,280.

The current rally has the potential to retest ₹1,224 level once again. Whether this level is getting breached or not will decide the medium-term trend. A strong break above this level can take the contract higher to ₹1,350 in the medium-term. On the other hand, inability to breach this resistance can drag the contract once again to ₹1,050 levels.

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