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The Nickel futures contract on the Multi Commodity Exchange (MCX) has surged over 7 per cent in the past three trading sessions. The 200-day moving average support at ₹663 per kg halted the contract’s interim pullback from ₹703. The contract made a low of ₹664.4 per kg on August 14 and has reversed sharply higher from there. It is currently trading at ₹737 per kg, gaining ₹6 or 0.8 per cent.
So far, the contract has advanced more than 4 per cent this week. Since taking support at ₹558 in early June 2017, the contract has been in a medium-term uptrend, forming higher peaks and troughs.
The uptrend that has been in place since June is intact and gained bullish momentum. The 21-day moving average has crossed over the 200-day moving average. Similarly, the 55-day moving average has crossed over the 100-day moving average. These indicators on the charts signal that the downside could be limited for the contract. The uptrend is likely to extend in the coming days and a rally to ₹760 and ₹765 is possible. With the recent rally, the contract appears to have resumed its intermediate-term uptrend. Moreover, the short-term trend is also up for the contract.
The daily and weeky relative strength indices are featuring in the bullish zone, backing the uptrend. Further, the daily as well as weekly price rate of change indicators are hovering in positive territory, implying buying interest. Intermediate pull-back moves can find immediate support at ₹730. A key short-term support is placed at ₹720, and a fall below this level is unlikely.
Traders with a medium-term perspective can go long on dips at ₹730. A stop-loss can be placed at ₹718 for the target of ₹760. Accumulate long positions at ₹725 and ₹720 levels if the contract declines below ₹730. Revise the stop-loss higher to ₹735 as soon as the contract moves up to ₹740.
The short-term view will turn negative only if the MCX-Nickel futures contract declines below ₹720. In that case, the contract can decline further and the next targets are ₹700 and ₹690. However, such a fall looks less probable at the moment.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading
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