Following a sharp fall in the previous week, the Nickel futures contract on the Multi Commodity Exchange (MCX) found support in the band between ₹740 and ₹750 a kg.

The contract started to move higher this week, in the first two trading sessions, and the contract has advanced 2 per cent.

On Wednesday’s trading session, the contract traded flat at around ₹766. The corrective rally can extend in the upcoming trading sessions and take the contract higher to ₹780 in the near-term.

Further rally beyond this key resistance can push the contract northwards to ₹800 in the short-term. Strong breakthrough of ₹800 is required to alter the short-term downtrend and pave way for an up move to ₹820 and ₹840 levels.

Traders with a short-term perspective should trend with caution in the near-term. Inability to move beyond ₹780 can bring back selling pressure and pull the contract down to re-test the immediate support in the band between ₹740 and ₹750.

That said, an emphatic downward break of this support band can reinforce the downtrend and drag the contract down to ₹720 and ₹700 in the short-term.

Medium-term view: Since taking support at ₹558 in June, the contract has been in a medium-term uptrend, forming higher peaks and troughs.

On November 1, the contract breached a key resistance at ₹780. However, it encountered resistance at ₹840 and started to decline.

Witnessing a corrective decline, the contract found a key long-term support in the band between ₹740 and ₹750 last week. Only a conclusive plunge below the next key support level of ₹700 will alter the medium-term uptrend and pull the contract down to ₹685 and ₹670 levels.

On the other hand, a strong upward break of significant resistance level of ₹800 can accelerate the contract higher to ₹840 and ₹850 levels.

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

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