The September futures contract of Nickel on Multi Commodity Exchange moderated last week after recording a multi-year high at ₹1,314.8 a Kg. The space between ₹1,315 and ₹1,325 is a strong supply zone from which the commodity has corrected sharply in the past. Hence it is natural for the contract to face some downward pressure. Thus, the price weakened from its recent high of ₹1,314.8 to ₹1,221.4 losing 7.1 per cent. However, the contract immediately bounced above the crucial price band between ₹1,263 and ₹1,270. On Wednesday, a truncated trading session, the contract was less volatile as it opened at ₹1,280.7 and ended at ₹1,273.5 without much swings.

Considering the trading range of ₹1,222 and ₹1,315, there’s high chance of the contract staying sluggish in the near term. The next leg of trend can be along the direction of the breakout. In case if the bull trend regains momentum and moves past the above mentioned resistance field, the contract may head north towards ₹1,370 levels. On the other hand, if price slump below ₹1,222 levels, the contract might deteriorate to ₹1,190 levels — 61.8 per cent Fibonacci retracement of the latest bullish trend.

Referring to three months rolling forward contract of nickel in LME for the global trend, one can observe that the price has cooled-off after a strong rally. The price is hovering around the important level of $18,000 a tonne and contract seem to be trading within broader boundaries defined by key levels at $17,375 and $18,850.

Though the contract faced some sell-off during the past week, it has been gradually gaining in the last two trading sessions. However, unless it breaches $17,375 or $18,850, nickel will continue to consolidate.

MCX-Nickel futures contract seems to be taking a pause since the beginning of the month after a substantial bull run. From the perspective of trading, it is advocated to stay in the sidelines until either of ₹1,222 or ₹1,325 levels are taken out and initiate trades along the direction of the breakout.

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