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The Nickel futures contract on the Multi Commodity Exchange (MCX) fell sharply in the past week breaking below the 100-day moving average support (₹725 per kg).
The contract has tumbled 4.7 per cent in the past week and is currently trading at ₹700. The sharp fall in the last week confirms the head and shoulders bearish reversal pattern on the charts.
The region between ₹720 and ₹725 will now act as a strong resistance and can limit the upside.A fall to ₹685 or ₹680 is likely in the coming days. Further break below ₹680 will increase the likelihood of the fall extending to ₹672 — the 200-day-moving average support. If the contract manages to bounce from this support, a corrective rally to ₹700 or ₹710 is possible.
But if the contract breaks below the 200-day moving average support decisively, it will come under more selling pressure. In such a scenario, the contract can fall to ₹660 or even ₹650.
The level of ₹650 is a key medium-term support level for the contract. The current slide is likely to halt near this support.Traders can hold the short positions with the revised stop-loss at ₹715 for the target of ₹685. Move the stop-loss further lower to ₹695 as soon as the contract declines to ₹690.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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