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The nickel futures contract on the Multi Commodity Exchange (MCX) witnessed a strong rally breaking above the key resistance level of ₹950 per kg. However, the next resistance in the ₹995-1,000 region has halted this rally. The contract made a high of ₹995.4 on Tuesday and began to decline. It is currently trading at ₹982/kg.
As long as the contract trades below ₹1,000, there is a strong likelihood of it falling to ₹950 or ₹945 in the coming days. The region around ₹945 is a strong support which is likely to limit the downside. Further fall below ₹945 looks less probable at the moment. But if the contract breaks below ₹945, it can fall to ₹920 or ₹900.
An upward reversal from the ₹950-₹945 support zone can take the contract higher to ₹990 and ₹1,000 levels again. A range-bound move between ₹945 and ₹1,000 is possible in such a scenario.
The bias remains bullish. As such, an eventual break above ₹1,000 will boost the momentum. Such a break will increase the likelihood of the contract rallying to ₹1,050 and ₹1,100 levels.
Traders can stay out of the market at the moment. Traders with a high-risk appetite can make use of dips to go long at ₹950. Stop-loss can be placed at ₹920 for the target of ₹995. Revise the stop-loss higher to ₹960 as soon as the contract moves up to ₹975.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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