The Nickel futures contract on the Multi Commodity Exchange of India is under selling pressure.

On Wednesday, the contract fell 1 per cent to trade at ₹748.6 per kg, experiencing selling pressure at higher levels. Following a medium-term downtrend, the contract found support at around ₹750 in late November and began to move sideways. Since then, the contract has been range-bound between ₹750 and ₹800 with a negative bias.

The contract trades well below its 21- and 50-day moving averages. Moreover, the daily and weekly relative strength indices are featuring in the bearish zone backing the contract’s downtrend. Also, both the daily as well weekly price rate of change indicators are hovering in the negative terrain implying selling interest.

Currently, the contract tests the lower boundary at ₹750. A conclusive fall below this key base level will underpin the medium-term downtrend and can drag the contract down to ₹740 and then to ₹730 in the near term. Subsequent key supports are at ₹720 and ₹700. Traders with a short-term perception can initiate fresh short positions at this juncture with a stop-loss at ₹760. But, an upward reversal from the current support level can keep the contract range-bound between ₹750 and ₹800 for a while. A conclusive break above ₹800 is needed to alter the outlook positive. Such a breakout can bring back bullish momentum and take the contract higher to ₹830 and then to ₹850 over the short- to medium-term horizon.

Global trend

The Nickel (three-month forward) contract on the London Metal Exchange is still in a downtrend. However, within this downtrend, the contract has been on a sideways consolidation phase between $10,700 and $11,200 per tonne since late November. An immediate support is placed at $10,700. A strong fall below this support can drag the contract down to $10,600 and then to $10,400. Key resistances are at $10,800 and $11,000.

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

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