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Last week was a volatile one for the Nickel futures contract on the Multi Commodity Exchange (MCX). The contract opened with a wide gap-up last Thursday and surged to a high of ₹886.5. The contract has however come-off from this high and is currently trading at ₹863 per kg.
Outlook unclear
Inability to extend the upmove leaves the immediate outlook unclear for the MCX-Nickel futures contract. Support for the contract is in the ₹855-₹850 zone. The contract can dip to test this support zone in the near term. Whether the contract manages to reverse higher from there or not will decide the next move. An upward reversal from this support zone will ease the downside pressure. In such a scenario, there is a strong likelihood of the contract revisiting ₹900 and ₹910 levels over the medium term.
On the other hand, if the contract breaks below ₹850, it can fall to ₹840 initially. Further break below ₹840 will bring renewed pressure on the contract. Such a break will then increase the likelihood of the contract falling towards ₹820 or even lower levels on the back of profit booking.
Trading strategy
Traders with a medium-term perspective can wait for dips and go long on a reversal from the ₹855-₹850 support zone. Stop-loss can be placed at ₹835 for the target of ₹890. Revise the stop-loss higher to ₹865 as soon as the contract moves up to ₹875.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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