The price of nickel continues to weaken and has given up nearly 40 per cent of gains made this year. The November futures contract of the metal on the Multi Commodity Exchange of India (MCX) declined over the past week and broke the support at ₹1,126. The price action exhibits a strong bearish momentum and it will most likely depreciate further.

The moving average convergence divergence indicator remains in the negative territory; but the daily relative strength index, though suggests considerable bear strength, has entered the over-sold levels. While this is not necessarily a hint of a reversal, it could be an indication that bears may lose steam in coming days and so traders with short positions need to adjust risk management accordingly.

Currently trading at ₹1,077, the upcoming support for the contract on the downside is at ₹1,066. Below that level there is a minor support at ₹1,031. On the other hand, if the contract starts to move up from the support levels, it will face hurdle at ₹1,126 and the next resistance above that level is at ₹1,155.

LME-Nickel

Downtrend continues in three-month rolling forward contract of nickel on the LME. The price has dipped below the critical level of $15,000, opening the door for further weakness. LME-Nickel seems to have given up half of its current year gain. Most probably, the price may decline to $13,930, a reasonable support. Alternatively, if the price starts to appreciate from current market price of $14,690, it will face resistance at $15,000.

The price of MCX-Nickel futures and LME-Nickel, both have invalidated their respective support last week and the downtrend looks intact. Hence, one can continue to maintain a bearish view on the commodity. But as the contract has a support at ₹1,066, traders are advised to wait for a decisive break below that level and then initiate fresh short positions.

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