The nickel futures contract on the Multi Commodity Exchange (MCX) has been moving in a broad sideways range for more than two months. The contract has been rangebound between ₹820 and ₹910 a kg since February. Within this range, the contract made a low of ₹830 in the last week of March and has been moving higher since then. The contract has surged over 8 per cent from this low and is currently trading at ₹898 per kg.

Outlook

The near-term outlook is bullish. The contract can extend its upmove towards ₹900 and ₹910 – the upper end of the range, in the coming days. But whether the contract breaks above ₹910 or not will decide the next move. Inability to break above ₹910 and a subsequent pull-back move will keep the sideways move intact. In such a scenario, the contract can fall towards ₹880 or ₹870 in the short term.

On the other hand, if the MCX-Nickel futures contract manages to breach ₹910 decisively, it can gain fresh momentum. Such a break will then increase the likelihood of the contract rallying to ₹940 or ₹950. This will also leave the medium-term outlook bullish for the contract to target ₹1,000 levels.

The outlook will turn negative only if the contract breaks below ₹820 and the contract can decline to ₹805 or ₹800.

The bias on the chart is positive as the region between ₹830 and ₹820 appears to be a strong support zone. As such a break below ₹820 looks less probable.

Trading strategy

Traders with a medium-term perspective can go long on a break above ₹910. Stop-loss can be placed at ₹870 for the target of ₹980. Revise the stop-loss higher to ₹930 as soon as the contract moves up to ₹945.

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

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