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The nickel futures contract on the Multi Commodity Exchange (MCX) has tumbled 6 per cent in the past week. This has dragged the contract breaking below the key 200-day moving average support at ₹678 per kg. It is currently trading near ₹651.
A crucial support for the contract is at ₹645 which is likely to be tested in the coming days.
Whether the contract reverses higher or breaks below ₹645 will then decide the next leg of move.
A strong reversal from ₹645 may ease the downside pressure in the near term. Such a reversal can take the contract higher to ₹678 – the 200-day moving average level which may now act as a good resistance.
If the contract manages to rise above this hurdle then the upmove may extend to ₹700 or ₹710. The 21-week moving average is at around ₹710. Only a strong break and a decisive weekly close above this resistance will turn the outlook bullish for the contract.
On the other hand, if the contract breaks below ₹645 decisively, the current down move may extend to ₹640, ₹635 or even ₹630 levels.
A significant trend-line support is at ₹630 which is more likely to halt the down move if the contract declines below the support at ₹645 in the coming days.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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