The Nickel futures contract on the Multi Commodity Exchange (MCX) is under pressure. The contract has declined breaking below the key support zone of ₹855-₹860 per kg last week. The contract made a high of ₹882 per kg on March 22 and had reversed sharply lower from there. However, it recorded a low of ₹830.4 per kg recently and has bounced slightly higher from the low. The contract is currently trading at ₹840 per kg.

Bearish bias

The region between ₹855 and ₹860 will now serve as a strong resistance band for the contract and can cap the upside in the near term. Intermediate bounce to this resistance region is likely to find fresh selling interest coming into the market. A downward reversal from this resistance region will increase the likelihood of the contract falling to ₹815 or even to ₹800 in the short term.

The downside pressure will ease only if the contract breaks above ₹860 decisively. Such a break can trigger a relief rally to ₹875 – the 21-day moving average resistance. However, the outlook will turn bullish again only if the MCX-Nickel futures contract breaches the 21-day moving average hurdle decisively. But such a strong move looks unlikely at the moment.

Trading strategy

Short-term traders with a high-risk appetite can go short on rallies at ₹848 and ₹852. Stop-loss can be placed at ₹865 for the target of ₹818. Revise the stop-loss lower to ₹840 as soon as the contract declines to ₹830.

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

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