The nickel futures contract on the Multi Commodity Exchange (MCX) has surged over 4 per cent in the past week.
After hovering below ₹800/kg in the initial part of last week, the contract rallied sharply breaking above this psychological hurdle. It is currently trading at ₹826.
The short-term outlook will remain bullish as long as the contract remains above ₹800.
A rally to test the next key resistances at ₹853 and ₹860 is possible in the coming days.
Traders who have taken long positions at ₹816 and also accumulated at ₹806 and ₹790, can continue to hold. Revise the stop-loss to ₹810 and move it higher to ₹825 as soon as the contract moves up to ₹835.
Can consider taking the profits off that table at ₹860.
Whether the contract breaks above ₹860 or not will then decide the next trend. Inability to break above ₹860 and a pull-back from there can drag the contract lower to ₹800 levels.
But if the contract manages to breach ₹860 decisively, it can gain fresh momentum.
In such a scenario, the contract can target ₹900 in the coming weeks. The fresh rally to ₹900 will also pave way for the contract to target ₹980 and ₹1,000 over the long-term.
The region between ₹782 and ₹780 is a key support for the contract. The outlook will turn negative only if the contract falls below ₹780.
Such a fall can drag the contract lower to ₹765 or ₹760. But the price action since the beginning of this month suggests that the contract lacks strong sellers below ₹800. This leaves less possibility of the contract falling sharply below ₹800 in the short-term.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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