The Nickel futures contract on the Multi Commodity Exchange of India (MCX) has bounced up sharply in the past week. The support in the ₹735-730 per kg zone held very well. The contract made a low of ₹736.9 on January 2 and has reversed higher from there. The contract has surged over 7 per cent from the low and is currently trading at ₹793 per kg.

The upward reversal in the past week is significant technically as it has happened from the key 200-week moving average support. The price action in the coming days will need a close watch to determine whether the current bounceback move is a trend reversal or just a corrective rally.

Key resistances are at ₹800 and ₹810 which are likely to be tested in the near term. Whether the contract breaks above ₹810 or not will decide the next direction of move. Inability to breach ₹810 can pull the contract lower to ₹790. A further break below ₹790 will then increase the likelihood of the contract extending its downmove to ₹770 and ₹760.

On the other hand, if the MCX-Nickel futures contract manages to breach ₹810 in the coming sessions, it can gain fresh momentum. Such a break will pave way for the next target of ₹850.

Global trend

The Nickel (three-month forward) declined breaking below the crucial support level of $11,000 per tonne. However, the contract has reversed higher again after making a low of $10,525. It is currently trading at $11,180.

An immediate resistance is at $11,350. A strong break above it can take the contract higher to $12,000. On the other hand, if the LME-Nickel contract reverses lower from $11,350 and declines below $11,000, a fall to $10,700 is possible. A break below $10,700 can then drag it to $10,000 over the medium term.

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

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