Nickel futures contract on the Multi Commodity Exchange (MCX) has been stuck in narrow sideways range over the last week. The contract is oscillating between ₹880 and ₹905 per kg. Within this range, the contract is currently trading at ₹898 per kg.
The near-term outlook is mixed. Traders can stay out of the market until a clear trend emerges.
A breakout on either side of ₹880 or ₹905 will determine the next move. Until then the contract is likely to continue to remain sideways between ₹880 and ₹905.
If the MCX-Nickel futures contract breaks below ₹880, a fall to ₹870 or ₹863 is possible in the short term. A bounce from ₹870 or ₹863 can trigger a relief rally to ₹900 levels again. But a strong break below ₹863 will increase the likelihood of the contract tumbling to ₹830 or even ₹800 on the back of fresh selling.
On the other hand, if the contract sustains above ₹880 and moves beyond ₹905, the downside pressure will ease. Such a break can trigger an upmove to ₹925 or ₹930 in the near-term. The region between ₹925 and ₹930 is a crucial resistance. Inability to breach this hurdle can pull it to ₹900 or even lower thereafter. In such a scenario the overall downtrend that has been in place since June will remain intact. But if the contract manages to breach ₹930, decisively, there is a strong likelihood of a fresh rally to ₹960 and ₹970 on the back of short-covering.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading