The continuous contract of nickel on the Multi Commodity Exchange (MCX) was on an uptrend since April last week. Intermittent price corrections were there, but the overall trend remained up, marking a high of ₹1,554.7 last month. But, the contract started to weaken and has been on a decline for nearly a month now.

Last week, the contract slipped below a rising trendline and the support at ₹1,400. Notably, it has formed a double-top chart pattern on the daily chart with its neckline at ₹1,400. Since the futures has breached this level, the pattern now stands confirmed, indicating further fall. In addition, affirming the bearish bias, the relative strength index (RSI) and the moving average convergence divergence (MACD) indicator on the daily chart remain in a bearish territory. Also, the 21-day moving average (DMA) is on the verge of slipping below the 50-DMA - signs there could be a potential shift in medium-term trend to bearish.

Going ahead, the contract can fall further. While ₹1,350 is the nearest support from current levels, it is likely to go below this level and touch ₹1,300 – a key support. Subsequent support is at ₹1,270. Hence, traders can consider initiating fresh short positions with stop-loss at ₹1,430. Revise the stop-loss to ₹1,400, when the contract goes below ₹1,350 and look for a target at ₹1,300.

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