The July futures contract of nickel on Multi Commodity Exchange (MCX), which was on a decline since mid-June, took support at ₹950 and began to rally. Following this, the contract breached the important resistance at ₹1,000 on Monday. This has opened the door for further strengthening.
Substantiating the bull trend the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) indicators on the daily chart. The RSI is showing a fresh uptick in line with the rise in price and is above the mid-point level of 50. The MACD, which looked bearish, has turned the trajectory upwards; it remains in the positive territory. Also, the price is well above the 21-day moving average (DMA) and it has formed higher high on the daily chart, indicating a considerable bullish momentum.
Since the contract has broken out of the crucial level of ₹1,000, it is likely to move further up towards ₹1,050 in the upcoming trading sessions. Above that level, the price might rally to ₹1,100. On the other hand, if the contract gives up the gain and slips below ₹1,000, bears might fight back to take control. In such case, the contract might support at ₹980. Subsequently, it could be dragged to ₹950.
On the global front, the price of three-month rolling forward contract of nickel on London Metal Exchange (LME), which was oscillating in the band between $12,430 and $13,000 for the past one month, has rallied past the resistance at $13,000. Thus, the contract seem to have resumed its bull run. A positive sentiment in international prices could lift the price of MCX contract too.
Trade Strategy
The contracts on both MCX and LME have rallied past their respective resistances. Also since the major trend is bullish, the likelihood of a rally from here is high. Given the scenario, traders can initiate fresh long positions in MCX-Nickel on declines with stop-loss at ₹970.
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