The spot price of nickel on the MCX struggles to extend the corrective rally beyond the resistance at ₹1,066. At that level lies the 23.6 per cent Fibonacci retracement level of the previous downtrend.

Likewise, the January futures contract of Nickel on the MCX too struggles to advance beyond the resistance at ₹1,054. However, it continues to stay above the 21-DMA. But, the contract has been consolidating within a range between ₹1,010 and ₹1,054 for the past few trading sessions. A prolonged consolidation might not work in favour of the contract as it might start to decline, aligning with the major downtrend.

As the price moves in a sideways trend, the daily Relative Strength Index is flat, but the Moving Average Convergence Divergence on the daily chart indicates a bullish bias.

Considering the above factors, the contract will not be able to build a trend as long as it stays within ₹1,010 and ₹1,054. If the contract manages to breach the upper boundary of the range, it will face resistance at ₹1,100. Beyond that level, the resistance is at ₹1,125. On the other hand, if the contract breaches the lower boundary of the range, it will most likely retest its previous low at ₹965. Support below that level is at ₹920.

On the global front, the price of the three-month rolling forward contract of Nickel on the London Metal Exchange also seems to have entered a sideways trend, fluctuating between $13,875 and $14,526. The contract should move out of this range to confirm the next leg of trend. Above $14,526, the resistance is at $15,000 and below $13,875, the support is at $13,370.

Trading strategy

Though MCX-Nickel futures is in a consolidation phase, the major trend remains bearish. However, further decline can be confirmed only if it declines below ₹1,010. So, traders are recommended to initiate fresh short positions only below ₹1,010 with stop-loss at ₹1,055.