The downtrend in the Nickel futures contract on the Multi Commodity Exchange (MCX) ended in the past week and the contract has been consolidating in a sideways range over the last few days.

The downtrend that has been in place since the beginning of this month, from the high of ₹786 per kg, halted at a low of ₹674.2 last Friday. Since then, the contract has been moving in a sideways range between ₹674 and ₹693. If the contract manages to break above ₹693, it can move up to ₹700 in the near term.

Only a decisive break above ₹700 will reduce the downside pressure and turn the outlook positive.

In such a scenario, a rally to ₹720 or ₹730 is possible. But, as long as the MCX Nickel futures contract trades below ₹700, the downtrend will remain intact. It will keep the possibility alive of the contract breaking below ₹674. Such a break can drag the contract lower to ₹660 or ₹658.

Strong support level

The region between ₹660 and ₹658 is a strong support region. Both a trend-line as well as the 200-day moving average are poised in this region.

An immediate break below this support zone is unlikely. Also, the 21-week moving average is on the verge of crossing over the 100-week moving average, a positive signal indicating that the downside could be limited. These indicators leave the possibility high of the contract reversing higher from the ₹660-₹658 support zone.

Such a reversal may have the potential to take the contract higher to ₹700 and ₹750 over the medium term.

Those with a medium-term view can go long on dips to ₹660. A stop-loss can be kept at ₹640 for the target of ₹720.

Note: The recommendations are based on technical analysis. There is a risk of loss in trading

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