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The Nickel futures contract on the Multi Commodity Exchange (MCX) bounced from the psychological support level of ₹1,000 per kg in the initial part of the week. But, this upmove was short-lived. The contract made a high of ₹1,040 on Friday and has come-off sharply from there to make a low of ₹988.5 on Tuesday. It has bounced slightly higher from this low and is currently trading at ₹995 per kg.
Outlook
The price action on the chart leaves the bias negative. Key resistances are poised in the ₹1,000-₹1,010 region and then in the ₹1,020-₹1,030. A strong break above ₹1,030 is needed for the contract to gain fresh momentum. Such a break will pave way for a fresh rally to ₹1,070 or even high levels. But such a strong rally looks less probable at the moment.
A near-term support is at ₹983 – the 55-day moving average, which is likely to be tested as long as the contract remains below ₹1,010. A bounce from this support can keep the contract in a sideways range between ₹983 and 1,010 for some time. But a strong break below ₹983 will increase the downside pressure. In such a scenario, the contract can tumble to ₹950 or even ₹940.
Trading strategy
High risk appetite traders with a medium-term perspective can go short on rallies at ₹1,000 and 1,010. Keep the stop-loss at ₹1,025 for the target of ₹950. Revise the stop-loss lower to ₹995 as soon as the contract moves down to ₹985.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading
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