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The uptrend in the Nickel futures contract on the Multi Commodity Exchange (MCX) seems to have been losing strength over the last one week.
The contract made a high of ₹1,063.5 per kg on June 6 and has been inching lower since then. It is currently trading at ₹1,025 per kg.
An immediate resistance is at ₹1,050. As long as the contract trades below this hurdle, the near-term view will remain negative. The current down-move is likely to remain intact and the contract can decline to ₹1,010 or ₹1,000 in the near term.
Whether the contract reverses higher from the ₹1,010-₹1,000 support zone or not will be key in determining the next trend. If the MCX-Nickel futures contract manages to reverse higher from the ₹1,010-₹1,000 support zone, the downside pressure will ease.
In such a scenario, the possibility of the contract revisiting ₹1,050 and ₹1,060 levels will be high. The slow pace of the fall over the last one week leaves the bias bullish for the contract to sustain above ₹1,000 and reverse higher again in the coming days. But, if the contract breaks below ₹1,000, it can fall to ₹990 initially.
A further break below ₹990 will then increase the likelihood of the contract falling to ₹950 over the short term.
Trading strategy
Medium-term traders who have taken long positions a couple of weeks at ₹993 can exit the trade at current levels.
Short-term traders with a high-risk appetite can go long on dips at ₹1,010 and at ₹1,005. A stop-loss can be placed at ₹985 for the target of ₹1,060. Revise the stop-loss higher to ₹1,020 as soon as the contract moves up to ₹1,030.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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