The August futures contract of nickel on Multi Commodity Exchange (MCX) has been in an uptrend, and last week it registered a new high of ₹1,117. Since then, the price has moderated. However, the contract stays above the 21-day moving average (DMA), and it has been forming higher highs – indicating good bullish momentum.

Substantiating the positive outlook, the moving average convergence divergence indicator in the daily chart is tracing an upward trajectory and lies in the bullish zone. But the daily relative strength index is flat; however, it remains above the midpoint level of 50.

Considering the above factors, the contract can be inclined towards upside until the price stays above ₹1,040. The 21-DMA and the 50 per cent Fibonacci retracement level of the previous upswing coincides at this price, making it strong support. If the contract advances from the current level, it is likely to retest the prior high at ₹1,117. A breakout of this level can attract more bulls, possibly taking the contract to ₹1,200. On the other hand, if the contract weakens below ₹1,040, the near-term outlook might turn negative, and the price could drop to the critical support of ₹1,000. Subsequent support is at ₹965.

On the global front, the price of the three-month rolling forward contract of nickel on London Metal Exchange (LME) has been in an uptrend since the beginning of April. Last week, the price broke out of $14,000, opening the door for further strengthening. So, the contract is most likely to rally from the current levels, and it will remain bullish as long as it trades above $14,000.

Trading Strategy

The contract on MCX stays above the vital support of ₹1,040 despite the recent price correction. Also, the overall trend is bullish. Supporting this, the global trend is positive as well. So, traders can buy the contract on declines with stop-loss at ₹1,040.

 

Related Topics
comment COMMENT NOW