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The Nickel futures contract on the Multi Commodity Exchange (MCX) has extended its rally towards ₹640 a kg in the past week, as expected. The contract made a high of ₹642.9 on Tuesday and has come off slightly from there.
It is currently trading near ₹637 per kg. Immediate support is at ₹627, which can limit the downside in the near term. Though a test of this support looks likely in the coming days, a break below it is less probable.
A subsequent reversal from ₹627 can take the contract higher to ₹640 levels once again. A strong break and a decisive close above ₹640 will boost the momentum.
Such a break will increase the likelihood of the contract rallying to ₹657 — the 38.2 per cent Fibonacci retracement or even to ₹665 – the 200-day moving average resistance .
Short-term traders who have taken long positions on dips last week at ₹615 can hold them. Revise the stop-loss higher to ₹620 for the target of ₹645.
The contract will come under pressure if it declines below the support at ₹627. Such a break can pull the contract lower to ₹615 or ₹610. A further fall below ₹610 is unlikely as the region between ₹615 and ₹610 is a strong support zone that can cushion the contract.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading
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