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The Nickel futures contract on the Multi Commodity Exchange (MCX) opened the year on a high note on Monday.
But the contract failed to get strong follow-through buying thereafter. The MCX Nickel futures contract touched a high of ₹815.5 per kg on Tuesday and has come-off that level. It is currently trading at ₹798.5.
Technically, the medium-term resistance is at ₹814 and has capped the upside and triggered this pull-back move.
As long as the contract remains below ₹814, a fall to ₹785 is likely in the coming days.
A break below ₹785 will increase the likelihood of the down-move extending to ₹775. The levels of ₹785 and ₹775 are key trend-line supports, which are likely to limit the downside in the short-term.
A strong upward reversal from either ₹785 or ₹775 can trigger a fresh rally to ₹810 and ₹815. An eventual break above ₹815 will increase the possibility of the contract targeting ₹850 and ₹870 levels over the medium-term.
Short-term traders with a high-risk appetite can wait for dips and go long at ₹787. Accumulate long positions at ₹778 if the contract declines below ₹785.
Keep the stop-loss at ₹770 for a target of ₹810. Revise the stop-loss higher to ₹795 as soon as the contract moves up to ₹805.
The outlook will turn bearish only if the contract breaks below ₹775 decisively.
Such a break will increase the likelihood of the contract falling to ₹750 thereafter.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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