The downtrend in the Nickel futures contract on the Multi Commodity Exchange (MCX) paused in the past week. The contract was stuck in a sideways range between ₹563 and ₹581 a kg. Within this range the contract is trading slightly below the upper end of the range, at ₹575 per kg.
The bias within the range remains bearish and the overall downtrend is expected to remain intact. A cluster of resistances at around ₹580 may make it difficult for the contract to break above this hurdle.
As such, a break below ₹563 can bring fresh selling pressure. Such a break can drag the contract lower to ₹550 initially. A further break below ₹550 will increase the likelihood of the contract, extending its fall to ₹535. The level of ₹535 is a significant long-term trend support, which can halt the current downtrend.
Short-term traders with a big risk appetite can make use of a rise to ₹580 to go short. A stop-loss can be placed at ₹593 for the target of ₹555. Revise the stop-loss lower to ₹575 as soon as the contract moves down to ₹568.
On the other hand, if the MCX-Nickel futures contract manages to breach ₹581 decisively, it can rise to ₹587 or ₹592 in the coming days. A further break above ₹592 will pave way for the next targets of ₹600 and ₹610.
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