The Nickel futures contract on the Multi Commodity Exchange (MCX) extended its down-move in the past week as expected. The contract surged to a high of ₹984.7 on Thursday last week, but failed to sustain at higher levels. It reversed sharply lower from this high and tumbled to a low of ₹910. However, the contract has bounced slightly from this low and is currently trading at ₹915 per kg.

The sharp fall in the past week has dragged the contract well below the key support level of ₹950. This level will now act as a strong resistance and may cap the upside in the near term. Intermediate bounce to this hurdle may find fresh sellers coming into the market.

Psychological support is at ₹900. If the contract manages to sustain above this level, an intermediate bounce to ₹950 is possible. In such a scenario, the contract may remain range-bound between ₹900 and ₹950 in the short term.

However, the bias will continue to remain bearish. An eventual break below ₹900 will increase the likelihood of the contract extending its fall to ₹870 and ₹850.

The downside pressure would ease only if the MCX-Nickel futures contract breaks above ₹950 decisively. Such a break can trigger a relief rally to ₹980 or ₹1,000. However, such a strong up-move breaking above ₹950 looks unlikely at the moment.

Trading strategy

Traders with a short-term perspective can make use of rallies to go short at ₹935 and ₹950. Stop-loss can be placed at ₹965 for the target of ₹875. Revise the stop-loss lower to ₹905 as soon as the contract moves down ton ₹895.

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

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