The bulls seems to be riding the positive momentum as the September futures contract of nickel on Multi Commodity Exchange (MCX) continues to post gains. The contract has been consistently making higher highs and during the final week of August, it broke out of the important level of ₹1,125 following a consolidation phase. The price action in the daily chart looks steady and the price can be expected to rise further.
Substantiating the positive outlook, the daily relative strength indicator is moving up along with the contract and the slope remains positive. But the moving average convergence divergence indicator in the daily chart remains flattish. Nevertheless, it remains in the bullish zone. Moreover, since the contract is trading above the 21-day moving average, the outlook remains positive and if at all there is a minor correction, the price level of ₹1,125 can act as a solid cushion.
Considering the above factors, in the coming days, the contract will most probably appreciate to ₹1,175. The immediate resistance above that level can be ₹1,200. On the other hand, if the contract loses momentum and begins to descend, it has a substantial base at ₹1,125. But a break below that level can turn the short-term trend bearish. Subsequent support level can be spotted at ₹1,100.
On the global front, the rally in the three-month rolling forward contract of nickel in London Metal Exchange looks very strong and last week it breached the psychological level of $15,000. There are no signs of weakness the bulls are expected to be in control lifting the contract further on the upside. A global price rally can lift the contract in MCX as well.
Trading Strategy
The uptrend in MCX-Nickel looks intact and the global rally is supportive of the same. The most probable scenario is that the rally will continue and so, traders can initiate fresh long positions in declines with stop-loss ₹1,125.
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