The three-month rally in the nickel futures contract traded on the Multi Commodity Exchange has failed to break the psychological level of ₹1,000-mark. The uptrend from the January low of ₹830 a kg halted at ₹997.9 and the contract has declined 3 per cent since then. This provides a good trading opportunity for the short and medium-term traders.

Short-term view: Inability of the MCX nickel futures to break the psychological level of ₹1,000 has turned the short-term outlook bearish. The contract had dropped breaking below its 21-day moving average, currently at ₹957 and is hovering near this level over the last few days. The price action on the daily candle chart suggests that the contract lacks momentum. Key short-term resistances is ₹967. The outlook stays negative as long as the contract trades below this resistance. Traders can go short with stop-loss at ₹975. The target will be ₹922. The short-term outlook will turn positive only if the contract breaches and closes decisively above ₹970.

Medium-term view: The MCX nickel contract is in a prolonged sideways consolidation since 2012 between ₹800 and ₹1,000. The reversal from the high of ₹997.9 last month keeps thebroader sideways range intact. The chances of the contract declining to the lower end of this range are now highThe contract has also broken and closed decisively below its 200-week moving average, currently at ₹966 last week. This adds further pressure on the nickel futures contract and leaves the medium-term outlook bearish. Significant support is at ₹900. A break below this level can drag the contract to ₹850. Investors with a medium-term time-frame can go short now with a wide stop-loss at ₹1,015 for the target of ₹850.

However, investors should turn cautious if the contract reverses higher from the support at ₹900. In such a scenario, medium-term investors should exit the short position once the contract rises above ₹915.

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