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The continuous contract of nickel on the Multi Commodity Exchange (MCX) rallied in the first couple of months this year. But, after hitting a high of ₹1,446 in February final week, the contract made a u-turn and began to move southwards. The fall was quick and it dropped to ₹1,140 levels within a couple of weeks. Since then, the band of ₹1,140 and ₹1,150 acted as a solid base. The contract then gathered strength. The price began going up in March last week from about ₹1,150 and since then, it has gradually headed north.
The rally ran into a resistance at ₹1,360 and since early May, it has been struggling to go beyond this level. But an up-move that began two week ago has given the contract a good momentum and it has broken out of ₹1,360 last month-end.
Although there was no significant follow through rally, the contract is able to sustain above the resistance-turned-support of ₹1,360. Indicators like the relative strength index (RSI) and the moving average convergence divergence (MACD) remain in their respective bullish territories and the average directional index (ADX) shows that the bulls are strong. Moreover, the open interest of the futures contract has been steadily rising with the price, a bullish signal. Hence, traders can be positive and buy nickel futures with stop-loss at ₹1,330 for a target of ₹1,450.
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