The September futures contract of nickel on Multi Commodity Exchange (MCX) has been advancing. It has gained nearly 20 per cent since the beginning of June. But now the bulls seems to be taking a break, as evident from the price action in the past week – it has been fluctuating in a narrow range between ₹1,110 and ₹1,125.

Since the overall trend is positive, the uptrend is likely to gain momentum and establish a fresh leg of rally in the upcoming sessions. The contract, well above the 21-day moving average (DMA), shows a good upward traction. Substantiating the bullish bias, the relative strength indicator and the moving average convergence divergence indicator in the daily chart stays in their respective positive territory.

The above factors indicate that the contract retains bullishness and a fresh rally from here can take the price to ₹1,160 in the near-term. Above that level, it can rise to ₹1,175. But on the other hand, if the bulls give up and the contract weakens, the immediate support is at ₹1,100. A breach of this level can drag the price to ₹1,070. This price point can be crucial because if the contract slips below it, the outlook might turn bearish.

The rally in the three-month rolling forward contract of nickel on London Metal Exchange (LME) that began in early April shows no sign of weakening. The contract is approaching a psychological level of $15,000. With the current momentum, the likelihood is that the contract can breeze past that level and this can have a positive impact on the contract in MCX.

 

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Trading Strategy:

Even though the contract on MCX is now trading sideways, the major trend remains bullish. The uptrend is corroborated by the global price movement of the metal, as indicated by the LME contract. So, traders can go long in the contract in dips with stop-loss at ₹1,100 and look for a primary target of ₹1,160.

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