Following a sharp fall in late February and early March this year, the continuous contract of nickel on the Multi Commodity Exchange of India (MCX) has found support at ₹1,150 levels. The contract took support at this base level and reversed direction in late March. It triggered positive divergence in the daily relative strength index.

Since then, the commodity has been going through a short-term uptrend. While trending up, the contract had breached a key resistance at ₹1,275 in late April and extended the uptrend. The contract trades well above the 21- and 50-day moving averages. The contract currently testing resistance at ₹1,340 level and the uptrend is losing momentum. The contract now trades at ₹1,320 levels. A minor corrective decline to the immediate support level of ₹1,310 can’t be ruled out now.

Traders with a short-term perspective can make use of the declines to buy the contract with a stop-loss at ₹1,295 levels. A decisive breakthrough of the barrier at ₹1,340 will strengthen the uptrend and take the contract northwards to ₹1,360 and then to ₹1,380. Crucial resistance above ₹1,380 are placed at ₹1,400 and ₹1,440 levels.

On the downside, if the contract plunges below the vital medium-term support level of ₹1,275, it will alter the ongoing uptrend and drag the contract to ₹1,240 and then to ₹1,200 levels.

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