The March futures contract of Nickel on the Multi Commodity Exchange of India (MCX) was inching up for the past two weeks. But on Tuesday, it declined after briefly trading above the critical resistance level of ₹966. As this level is coincided by the 50-day moving average (DMA), it is acting as a strong resistance. So, unless the contract breaks out of that level decisively, it cannot establish a bullish reversal. Also, the major trend is bearish.

The Moving Average Convergence Divergence (MACD) indicator on the daily chart, which rose on the back of recent uptrend stays in the bearish territory. On the other hand, the daily Relative Strength Index (RSI) has slipped below the mid-point level of 50.

Since the overall trend of the metal is bearish and the contract has a substantial resistance at ₹966, the contract price might weaken further from the current levels. But it has an immediate support at ₹925. A break below that level can drag the contract to ₹900 and ₹872. But if the contract rallies and breaks out of the hurdle at ₹966, the medium-term trend can become bullish. A rally above that level can take the contract to the psychological level of ₹1,000.

On the global front, the price of three-month rolling forward contract of Nickel on the London Metal Exchange (LME) is in a sideways trend, oscillating between $12,140 and $13,000. The next leg of trend cannot be confirmed until $12,140 or $13,000 is breached.

Trading strategy

Since the contract price of Nickel on the MCX is trading below the resistance at ₹966, one can continue to be bearish on the commodity with an eye on ₹925, which is a support level. Traders can initiate fresh short positions with a stop-loss at ₹975 if the contract declines below ₹925.

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