The Nickel futures contract on the Multi Commodity Exchange (MCX) tumbled in the past week breaking below the key support level of ₹736 per kg.
The contract made a low of ₹693 on Friday and was range-bound between ₹693 and ₹720 for a few days.
On Wednesday, the contract has surged breaking the range above ₹720. It is currently trading at ₹733 per kg.
Technically, the rebound that has happened in the past week is significant. It has happened from just below the 38.2 per cent Fibonacci retracement support level of ₹699.
If the contract manages to sustain above ₹720, a rally to ₹746 is possible in the coming days. Further break above ₹746 will increase the likelihood of the contract extending its upmove to ₹760 levels.
Short-term traders with high risk appetite can go long on dips at ₹725.
Stop-loss can be placed at ₹715 for the target of ₹745. Revise the stop-loss to ₹730 as soon as the contract moves up to ₹738.
On the other hand, the contract may come under pressure if it declines below ₹720 again.
The contract can fall to ₹700 in such a scenario.
A decisive break and close below ₹700 will increase the possibility of the contract extending its fall to ₹780.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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