The Nickel futures contract on the Multi Commodity Exchange (MCX) has been volatile in the past week. After testing ₹784 a kg for two consecutive days, the contract slumped 5.7 per cent on Friday. Though it managed to recover slightly on the next two trading days, the contract has reversed lower again on Wednesday. The contract made a high of ₹764 on Tuesday and has come-off from there to trade currently at ₹738 . The 21-day moving average support at ₹740 which was limiting the downside since Friday is broken now. Next key support is at ₹736. If the contract manages to reverse higher from this support, a range bound move between ₹736 and ₹765 is possible for some time.

But if the MCX-Nickel futures contract breaks below ₹736 decisively, the selling pressure may intensify. Such a break will confirm that the contract has entered into a correction phase. The contract can then fall to ₹725 and ₹720 initially. Further fall below ₹720 will increase the likelihood of the fall extending to ₹700 levels thereafter.

Short-term traders with a high-risk appetite can go short on a decisive break below ₹736. Stop-loss can be placed at ₹741 for the target of ₹725. Revise the stop-loss lower to ₹733 as soon as the contract moves down to ₹729.

Note: The recommendations are based on technical analysis. There is a risk of loss in trading

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