Gurumurthy K The downtrend in the Nickel futures contract on the MCX that had been in place over the last two weeks seems to have come to an end. The contract made a low of ₹878.6 per kg on Monday and has bounced up sharply from there. The contract has surged over 3 per cent from the recent low and is currently trading at ₹908 per kg.
A key near-term resistance is at ₹917 — the 21-day moving average. A strong break above this hurdle will ease the downside pressure. Such a break will then take the contract higher to ₹937. A further break above ₹937 will then increase the likelihood of the contract targeting ₹950 or ₹955 over the short-term.
The region between ₹950 and ₹955 is a crucial medium-term resistance. Whether the contract manages to breach this resistance zone or not will determine the direction of the next move. A strong break and close above ₹955 will pave way for the next targets of ₹1,000 and ₹1,050 over the medium-term.
On the other hand, if the MCX-Nickel futures contract fails to break the ₹950-955 resistance zone and reverses lower, a fall initially to ₹935 is possible. A further break below ₹935 will then increase the likelihood of the contract extending its fall to ₹920 or even ₹900.
Global trend
The Nickel (three-month forward) contract on the LME has been oscillating around $13,000 per month for more than two weeks. It is currently trading at $13,149 per tonne.
The price action on the daily chart indicates bullish bias. A near-term resistance is at $13,370. A strong break above this hurdle will increase the likelihood of a fresh rally to $14,000.
The level of $12,800 is a key support and the outlook will turn negative only if the contract declines below this support.
(Note: The recommendations are based on technical analysis and there is a risk of loss in trading.)
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