The Nickel futures contract on the Multi Commodity Exchange (MCX) extended its fall in the past week as expected. The contract tested ₹990 per kg earlier in the past week and has tumbled over 5 per cent to make a low of ₹934 on Wednesday. However, it has managed to bounce from the low and is currently trading at ₹943 per kg.
The sharp fall over the last couple of weeks has dragged the contract well below the key ₹950-₹948 support region. This region will now act as a near-term resistance. Inability to breach ₹950 decisively could retain the downside pressure on the contract. As long as the contract remains below ₹950, a fall to ₹930 or ₹925 is possible in the coming days. A further break below ₹925 will then increase the likelihood of the contract extending its fall towards ₹910 and ₹900.
The downside pressure will ease only if the contract breaks above ₹950 decisively. Such a break can trigger a relief rally to ₹970 or ₹990. However, the price action on the daily chart suggests that an up-move breaking above ₹950 is unlikely. Any intermediate bounce towards ₹950 is likely to find fresh sellers coming into the market.
Trading strategy
Short-term traders with a high-risk appetite can go short at current levels and at ₹949. Stop-loss can be placed at ₹965 for the target of ₹905. Revise the stop-loss lower to ₹937 as soon as the contract moves down to ₹931.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.