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The nickel futures contract on the Multi Commodity Exchange (MCX) fell to test the 21-day moving average support in the past week as expected. The contract made a low of ₹867 per kg last week and has managed to bounce from this support. It has been hoveringat the psychological level of ₹900 over the last couple of days. It is currently trading at ₹899/kg.
The near-term outlook is positive. A key resistance is poised near ₹915 which is likely to be tested in the coming days. Whether the contract breaks above this hurdle or not will decide the next move.
Inability to breach ₹915 and a pull-back thereafter can drag the contract lower towards the 21-day moving average support level of ₹874. A strong break below this support will increase the possibility of the contract tumbling towards ₹850 or ₹840 on the back of profit booking.
On the other hand, if the contract manage to breach ₹915 decisively, it can gain fresh momentum. Such a break will pave way for the next targets of ₹940 and ₹950.
The overall bias continues to remain bullish. Traders with a medium-term perspective can go long on dips near ₹850. Stop-loss can be placed at ₹815 for the target of ₹935. Revise the stop-loss higher to ₹860 as soon as the contract moves up to ₹895.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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