The May futures contract of nickel on the Multi Commodity Exchange (MCX), which rallied last week, was unable to move beyond the resistance band between ₹950 and ₹960. During the current week, the price has been moderating and is currently testing the 21-DMA.

In effect, the contract continues to move sideways with limits at ₹900 and the resistance band mentioned above. Thus, unless the price breaches either of ₹900 or ₹960, the next leg of trend will be uncertain. And, currently trading at ₹925, the contract is trading lower by about 11 per cent for the year.

The Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) indicator on the daily chart remains flat. Yet, both the indicators are in their respective bullish territory.

A rally from current level will face a hindrance at ₹960. A break out of that level can potentially result in contract price rallying to the important level of ₹1,000. On the contrary, if the contract extends the price moderation, ₹900 is expected to offer considerable support. Notably, the 50-DMA at ₹906 can also act as a cushion. But a break below ₹900 can intensify the sell-off dragging the contract to ₹860.

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On the global front, the three-month rolling forward contract of nickel in London Metal Exchange (LME) bounced from the support at $11,850 last week. However, it is facing a hurdle at $12,340 the contract seems to be stuck within the range between $11,850 and $12,340. A breakout of $12,340 might result in a medium-term uptrend which can also lift the contract in MCX.

Trade strategy

The price action of the contract on the MCX and LME are not indicating a definite trend. Unless MCX-Nickel moves out of the range, the next swing of trend will be unclear. So, traders can remain on the sidelines until either of the limits of the range is breached.

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

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