It was a volatile week for the nickel futures contract on the Multi Commodity Exchange (MCX). The contract surged breaking above the key resistance level of ₹860 per kg and made a high of ₹888 on Monday. However, the contract has come-off sharply from there to record a low of ₹846 on Tuesday and has bounced back from there to the current levels of ₹860/kg.

The level of ₹850 is a key support for the contract. As long as the contract sustains above this support, a rally to ₹880 or ₹900 is possible. Inability to break above ₹900 can keep the contract in a sideways range between ₹850 and ₹900 for some time. However, the bias will continue to remain bullish. An eventual break above ₹900 will then pave way for the contract to target ₹980 and ₹1,000 levels over the long-term.

On the other hand, if the contract breaks below ₹850 decisively in the coming days, it can come under selling pressure. Such a break can drag the contract lower to ₹825 or ₹820 in the short-term. The region between ₹825 and ₹820 is a strong support zone which is likely to limit the downside.

Further fall below ₹820 is unlikely at the moment as dips to this support may attract fresh buyers into the market.

Traders with a medium-term perspective can go long on dips at ₹825. Stop-loss can be placed at ₹780 for the target of ₹900. Revise the stop-loss higher to ₹845 as soon as the contract moves up to ₹870.

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

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