The March futures contract of Nickel on the Multi Commodity Exchange of India (MCX), which declined during the last week, has bounced after registering a low of ₹889.1 last Friday. Currently, the contract is trading near the 21-DMA.

Following the recent bounce, the daily Relative Strength Index (RSI) is showing an uptick, but stays below the mid-point level of 50. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator on the daily chart is showing a potential shift in momentum in favour of bulls. However, the contract will face a considerable resistance at ₹966 and until the price remains below that level, the possibility of a bullish trend reversal seems low.

Since the major trend of the metal is bearish and the contract has a significant resistance at ₹966, the likelihood of price declining from current levels looks higher. On the downside, the price might moderate to ₹900. A break below that level can drag the contract to ₹872.

On the other hand, if the contract advances in upcoming sessions and breaks out of the hurdle at ₹966, it can turn the medium-term trend 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) marked an eight-month low of $12,140 on Friday and has rebounded to the current market price of $12,560. But the overall trend remains bearish and the price stays below the 21-DMA. While $12,140 is the immediate support, the nearest resistance can be spotted at $13,000.

Trading strategy

Though the contract price of Nickel on the MCX has rallied in the past few sessions, it trades below the trend defining level of ₹966. Moreover, the forward contract in LME exhibits weakness. Hence, traders can continue to hold bearish view and short MCX-Nickel with stop-loss at ₹975.

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