The price of nickel continued its downtrend in the past week. The November futures contract of the metal has broken below the support at ₹1,155, which has confirmed a lower low in daily chart. This is a bearish indication, potentially hinting a change in the medium-term trend to the downside. Currently it is trading at ₹1,139. A minor support is available at ₹1,126.

The daily relative strength index continues to show weakness and the moving average convergence divergence indicator is in the negative territory. Adding to that, the 21-DMA remains below the 50-DMA, another sign of bearishness.

On the back of prevailing weakness, the contract will most likely fall below the support at ₹1,126 and decline to the subsequent support at ₹1,066 in the upcoming days. On the other hand, if contract appreciates from the current level, it has a hindrance at ₹1,155 — a support-turned-resistance. Beyond that level, it will face a strong resistance in the band between ₹1,200 and ₹1,209. Until the futures breakout of those levels, the chances for a recovery is less likely.

The price of nickel on LME has also been in downtrend. The three-month rolling forward contract of the metal has slipped below a crucial support of $16,000 and is currently trading below the support at $15,450. The likelihood of depreciation from current level is more and the contract has its next support at $15,000. Below that level, the support is at $13,930. On the upside, the contract will face significant hurdle at $16,050.

Trading strategy

The price of MCX-Nickel futures and LME-Nickel has broken below a key support level, and thus has opened the door for further depreciation in the medium-term. So, one can continue to hold bearish view and make use of the rallies to take short positions. Hence, traders are recommended to sell MCX-Nickel November contract on pull-backs with a stop-loss at ₹1,210.