The Nickel contract traded on the Multi Commodity Exchange of India has been on a long-term uptrend since it took support at ₹735 in January 2019. In the months of July and August the contract accelerated, breaking above a key resistance at ₹1,050 levels. But it encountered a key resistance in early September, recording a multi-year high at ₹1,314.8.
Subsequently, the contract changed direction, triggered by negative divergence on the daily price rate of change indicator, while the weekly relative strength index reached the overbought territory. Since then, the contract has been on a corrective decline. However, the contract found support at ₹1,159 on Tuesday and gained 2.9 per cent to close at ₹1,198.5.
On Wednesday, the October month contract was trading at around ₹1,188, down 0.85 per cent. The contract tests a key resistance at ₹1,200. A break above this barrier will strengthen the upmove and take the contract higher to ₹1,235 and then to ₹1,270 in the short term. Next key resistances are placed at ₹1,300 and ₹1,315. On the other hand, a slump below the immediate support level of ₹1,159 can extend the contract’s corrective decline to ₹1,140 and then to ₹1,100 in the short term.
On the global front, LME Nickel has been in a corrective decline since early August. It is currently testing a key support at $16,000 levels. A fall below this base can drag the contract lower to $15,700 and then to $15,500 levels. On the upside, a strong break above $17,000 can take it higher to $17,600 and then to $18,000.
The MCX Nickel is paused above a key support at ₹1,159. As long as this base holds traders should tread with caution. A strong fall below this level will be a cue to initiate fresh short positions with stop-loss at ₹1,185. Targets are ₹1,140 and ₹1,100.
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