The price of September expiry futures contract of Nickel on the MCX moderated throughout the past week. In the last five trading sessions, after recording a high of ₹1,284.2 a kg, it declined to a low of ₹1,196.7, down 6.8 per cent. Though it traded briefly below the key level of ₹1,200, the price recovered and is currently trading above that level.

The 21-DMA at ₹1,208 levels is providing a base to the contract. As long as the price stays above this level, chances are low for further depreciation. On Wednesday, the contract was largely trading flat, oscillating between ₹1,217.8 and ₹1,226.7, after opening the session at ₹1,217.8. It closed flat at ₹1,213.6.

If the contract continues to moderate and break below ₹1,208 on closing basis, the price can dip towards the key level of ₹1,200. Immediately below that level, support is at ₹1,190 — the 61.8 per cent Fibonacci retracement level of the previous bull trend. On the upside, it faces resistance at ₹1,225. If this level is decisively breached, the bullish trend will regain momentum and rise to ₹1,263.

The three-month rolling forward contract of Nickel on the London Metal Exchange has broken below the range between $17,375 and $18,850 and corrected to $17,000 — an important psychological level. If the contract slumps below this level, it will find support at $16,700 — the 61.8 per cent Fibonacci retracement level of the previous uptrend. But, if the price takes support and bounces from the current levels, the contract may rise to $17,375.

Trading strategy

Though the price of the MCX-Nickel futures contract has corrected, there is yet no confirmation of a trend reversal. Hence, it is advisable to maintain a bullish bias and buy on dips with stop-loss below the support at ₹1,190, and look for ₹1,263 on the upside in the medium term.

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