The downtrend in the Nickel futures contract on the Multi Commodity Exchange (MCX) halted in the past week.

The contract made a low of ₹907.3 per kg last week on Thursday and has bounced higher from there to ₹943.6. But, it has come off slightly from this high and is currently trading at ₹935/kg.

Broadly, the contract has been consolidating in a sideways range between ₹900 and ₹950 over the last one week within its overall downtrend.

As long as the contract remains above ₹900, there is a strong likelihood of it moving up to ₹950 or even ₹965 in the near term. The presence of the 100-day moving average at ₹950 and the 21-day moving average at ₹965 makes the ₹950-₹965 region a strong short-term resistance.

So, a further rally beyond ₹965 looks less likely at the moment. The contract may remain range-bound between ₹900 and ₹965 for some time. However, the bias will continue to remain negative.

An eventual break below ₹900 will bring renewed pressure on the contract. Such a break will then increase the likelihood of the contract tumbling to ₹870 or even ₹850 in the coming weeks. The bearish bias will get negated only if the contract manages to breach ₹965 decisively. Such a break will then pave the way for a corrective rally to ₹1,000 on the back of short covering.

Traders who have taken short positions at ₹935 can hold and also can accumulate at ₹950. Retain the stop-loss at ₹965 for the target of ₹875. Revise the stop-loss lower to ₹905 as soon as the contract moves down to ₹895.

Note: The recommendations are based on technical analysis. There is a risk of loss in trading.

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