The Nickel futures contract on the Multi Commodity Exchange (MCX) has been falling consistently for more than two weeks. The contract made a high of ₹792.9 per kg in the second week of December. It has tumbled about 7 per cent from the December high and currently trades at ₹740 per kg.

The price action in the past week leaves the near-term outlook mixed. The contract has been hovering above a crucial support level of ₹730. It has been stuck above this support in a narrow range between ₹735 and ₹755. Traders can stay out of the market until a clear trend emerges.

A strong break below ₹730 will drag the contract lower to ₹720 and ₹710. The level of ₹710 is a crucial long-term trend support. Whether the contract manages to bounce from this support or not will be key in deciding the direction of the next move. A bounce from ₹710, will ease the downside pressure and will take the contract higher to ₹730 and ₹750 again. But a break below ₹710 will increase the downside pressure and will drag the contract lower to ₹670 or even ₹650 thereafter.

On the other hand, if the MCX-Nickel futures sustain above ₹730 in the coming days and breach ₹755, an upmove initially to ₹765 or ₹770 is possible. A further break above ₹770 will then increase the likelihood of the upmove extending towards ₹790 and ₹800 thereafter.

Global trend

The Nickel (3-month forward) contract has been hovering below $11,000 per tonne. It is currently trading at $10,690 per tonne. The near-term price action suggests that the contract is lacking fresh buyers to take it decisively above $11,000. This leaves the bias bearish.

As long as the contract trades below $11,000, a fall to $10,000 is likely in the coming weeks. The downside pressure will ease if the contract manages to break above $11,000. The next target if $11,225.

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

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