Near-term view is negative for MCX-Nickel

The nickel futures contract on the Multi Commodity Exchange (MCX) was volatile last week. The contract surged breaking above the psychological ₹1,000 level and recorded a multi-year high of ₹1,095.2 per kg last Thursday.

However, the contract failed to sustain and has come-off sharply from this high giving back all the gains made during the week. The contract has plummeted over 14 per cent from the high and is currently trading at ₹938 per kg.

Room to fall

The MCX-Nickel futures contract has a resistance at ₹956 which is likely to cap the upside in the near term. The near-term view will remain negative as long as the contract trades below ₹956. A fall to ₹910 or ₹900 is likely in the near term. The region between ₹910 and ₹900 is a key short-term support. Whether the contract reverses higher from this support or not will decide the next move.

If the contract manages to bounce from the ₹910-₹900 support zone, the downside pressure will ease. In such a scenario, an up-move to ₹950 and ₹956 is possible. A strong break above ₹956 will further ease the pressure and will pave way for an up move to revisit the psychological ₹1,000 level.

On the other hand, if the MCX-Nickel futures contract breaks below ₹900, the downside pressure will increase. Such a break can drag the contract lower to ₹890 or ₹885 initially. Further break below ₹885 will then increase the likelihood of the contract tumbling towards ₹850 thereafter.

Trading strategy

Short-term traders with a high-risk appetite can go short on rallies at ₹948. Stop-loss can be placed at ₹963 for the target of ₹915. Revise the stop-loss lower to ₹941 as soon as the contract moves down to ₹936.

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

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