The continuous contract of nickel on the Multi Commodity Exchange (MCX) has been steadily gaining since March last year. The rally started from about ₹840 levels and it marked a fresh high of ₹1,461 in February this year. However, direction of the trend reversed abruptly and the contract saw a considerable fall. That is, between the final week of February and the first week of March, the contract tumbled by about 21 per cent to ₹1,154. Since ₹1,150 is a strong support, the decline was arrested the futures started to move sideways, largely oscillating between ₹1,154 and ₹1,200.

Notably, the contract began gaining positive momentum and in the first week of April, it broke out of the upper end of the range i.e., ₹1,200 and the outlook turned positive. Although it seemed to slowdown, the futures picked up traction this week and rallied past the prior high of ₹1,275 and managed to close above ₹1,300-mark on Wednesday. Thus, the price action on the daily chart has turned positive signaling further appreciation in price.

Supporting the bullish outlook, the moving average convergence divergence indicator has entered the positive territory and the daily relative strength index continues to move up along with the price. Thus, the rally will most likely sustain. Considering the time to expiry, traders can go long in the May expiry of MCX-Nickel with stop-loss at ₹1,255. Potential near-term target can be ₹1,380. A breach of this level can take the contract to ₹1,400.

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