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The Nickel futures contract on the Multi Commodity Exchange (MCX) sustained above the support at ₹850 a kg and surged to test ₹900 as expected in the past week.
But, the contract failed to extend its rally beyond ₹900 and has come-off after making a high of ₹897.9 on last week to test the support at ₹850 again on Tuesday. It is currently hovering above this support at ₹866 .
Whether the contract manages to remain above ₹850 or not will decide the next move. If the contract sustains above ₹850, it can remain range bound between ₹850 and ₹900 for some time.
A strong break above ₹900 will boost the momentum. Such a break will increase the likelihood of the contract rallying to ₹920 and ₹935 in the coming weeks.
On the other hand, if the contract breaks below ₹850, it can come under renewed pressure.
In such a scenario, the contract can fall to ₹820. The region at around ₹820 is a strong medium-term support. As such, further fall below ₹820 is less probable at the moment.
Traders with a high-risk appetite can go short on a break below ₹850.
Stop-loss can be placed at ₹865 for the target of ₹820. Revise the stop-loss lower to ₹840 as soon as the contract moves down to ₹835.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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