The latest run up in nickel price, which began in March 2021, seems to have slowed down towards the end of October. Thus, the continuous futures contract of nickel on the Multi Commodity Exchange (MCX) started to chart a horizontal path. However, since October last year, the contract has been forming lower highs and higher lows, effectively forming a triangle pattern on the daily chart. Even though triangles are considered to be trend continuation pattern, in this case bullish, the contract should move out on the upside to increase the chances of establishing a rally.

In early December, we had recommended longs at ₹1,550 and ₹1,535 with stop-loss at ₹1,480. Currently, the contract is trading around ₹1,575. Because the price action did not develop enough positive momentum since then, traders advised to tighten the stop-loss to ₹1,545 and reduce the risk of loss.

On the upside, exit the position if the price rallies to ₹1,600. For fresh positions, we will have to wait for more clarity on the price action front. Thus, until then participants looking for fresh opportunities can stay away.

A breakout of the triangle can induce fresh upward momentum wherein the contract can be expected to swiftly appreciate to ₹1,630. Above this level, it can rally to ₹1,668. On the other hand, if the contract breaks the triangle pattern on the downside, it can drop to ₹1,520 and then possibly to ₹1,500. Subsequent support is at ₹1,470. A breach of this level has the potential to turn the medium-term trend bearish.