Nickel, after a strong rally since July, has been in a sideways consolidation phase since the beginning of this month. The price of October expiry futures contract has been oscillating within a range between ₹1,200 and ₹1,285 a kg for the past three weeks.

The contract is currently trading below the 21-DMA, but it will have reduced significance the price is consolidating. The relative strength index is flat and the moving average convergence divergence indicator is exhibiting weakness. However, until the price breaks below ₹1,200, the traders can approach the contract with a bullish bias. The 23.6 per cent Fibonacci retracement level of the major uptrend is at ₹1,205 levels making the price band between ₹1,200 and ₹1,205 an important medium-term trend level.

If the contract topples the upper boundary of the consolidation range at ₹1,285, the price will find a minor resistance at ₹1,315 on the upside, beyond which the contract will head to ₹1,370 levels over the medium term. Alternatively, if the contract weakens from current level and the price breaks below the key support at ₹1,200 area, it will most likely decline to ₹1,138.

Global trend

Three months rolling forward contract of Nickel on London Metal Exchange shows some weakness with a lower-high in daily time frame. However, the price is currently hovering around $17,180 levels — just above the psychological level of $17,000. So, if the contract bounces, it will most likely appreciate towards $18,000. On the other hand, a break below $17,000 could drag the price to 16,385.

Even though the October expiry of MCX-Zinc futures contract is experiencing sideways trend, there is some weakness seen in the price action through moving average convergence divergence indicator. This is also reaffirmed by weakness in global prices. Hence, traders are recommended to stay on the sidelines until ₹1,200 or ₹1,285 level is broken decisively.

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