The nickel futures contract on the Multi Commodity Exchange (MCX) reversed sharply lower initially in the past week after making a high of ₹960. However, the sharp fall was short-lived. The contract has managed to recoup all the loss after making a low of ₹900. It is currently trading at ₹959 per kg.

Broadly, the contract has been rangebound between ₹900 and ₹960 for more than three weeks. The price action on the chart suggests that the contract lacks fresh sellers to drag it lower below ₹900. This increases the possibility of the contract breaking the current range above ₹960 in the coming sessions. Such a break can take the contract higher to ₹985 initially. Further break above ₹985 will then increase the likelihood of the contract extending its upmove higher to ₹1,000 and ₹1,020. It will also turn the medium-term outlook bullish for the target of ₹1,100 levels.

Strong support is in the ₹900-₹890 region. The contract will come under renewed pressure only if it declines below ₹890 decisively. Such a break will indicate the resumption of the current downtrend that has been in place since June. The next targets will be ₹865 and ₹850. However, such a sharp fall breaking below ₹890 looks unlikely at the moment. Intermediate dips to ₹900 is likely to get fresh buying interest coming into the market.

Trading strategy

Traders with a medium-term perspective can go long at current levels and also accumulate on dips at ₹940 and ₹925. Stop-loss can be placed at ₹880 for the target of ₹1,120. Revise the stop-loss higher to ₹975 as soon as the contract moves up to ₹990.

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

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