The May futures contract of nickel on the MCX has been trading between ₹930 and ₹960 in the past few trading sessions. The 61.8 per cent Fibonacci retracement level of the previous downtrend coincides at ₹960, making it a significant resistance. But the contract has been in an uptrend since second week of March and the price has moved past both 21- and 50-DMAs. And, as long as the price remains above ₹900, the contract can be approached with a bullish bias.

The daily Relative Strength Index is above the midpoint level of 50. On the other hand, the Moving Average Convergence Divergence indicator on the daily chart is in an upward trajectory and remains in the positive territory.

On the back of the prevailing upward bias, if the contract breaks out of the resistance at ₹960, it can rise to ₹1,000 – an important level. Beyond that level, the contract can rise to ₹1,035. But if the contract weakens and slips below the support at ₹930, the nearest support is around ₹908, where 50-day moving average and 38.2 per cent Fibonacci retracement level coincide. A break below that level can intensify the sell-off, potentially dragging the price to ₹860.

On the global front, the three-month rolling forward contract of nickel on the London Metal Exchange has been advancing since the beginning of the month. The price continues to be above the support of $12,000. Thus, the trend remains bullish and the contract will most likely go up from current levels.

Trading strategy

The contract is trading with a positive bias and as long as the price is above ₹908, the likelihood of a rally is more. But it has been oscillating in a tight range where ₹960 is a considerable resistance. Hence, traders can buy the contract with stop-loss at ₹900 if it moves past ₹960.

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

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