The June futures contract of nickel on the Multi Commodity Exchange (MCX) rallied last week after taking support at ₹960. It has been forming higher highs and higher lows on the the daily chart, indicating considerable uptrend. The 21-day moving average (DMA) which coincides there, makes it a significant support. Hence, the contract will remain bullish as long as it stays above ₹960.

Supporting the bullish view of the contract, the daily Relative Strength Index (RSI) is above the midpoint level of 50. Also, the moving average convergence divergence (MACD) indicator on the daily chart stays in the positive region and is in an upward trajectory.

On the back of the prevailing bullish bias, the contract is more likely to advance from the current levels. The contract could rise to ₹1,000 in the upcoming trading sessions. This level can be a strong hurdle. But a breakout of that level can lift the contract to ₹1,025. On the other hand, if the contract weakens, it might find support at ₹960 — its 21-DMA. Subsequent support is at ₹940.

On the global front, the three-month rolling forward contract of nickel on the London Metal Exchange (LME) has been rallying since the beginning of this month. But last week, it witnessed a price correction which dragged the price to the support level at $12,600. The contract bounced from that level and is currently retesting the resistance at $13,000. Since the contract has bullish bias, it is likely to breakout of the resistance, taking it to higher levels.

Trading strategy

The metal seems to be in a strong uptrend as indicated by the contracts on the LME and MCX. Moreover, the MCX-Nickel remains above the crucial support of ₹960 and until it stays above that level, the likelihood of a rally is high. So, traders can buy the contract on declines with stop-loss at ₹930.

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

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