The uptrend in the Nickel futures contract on the Multi Commodity Exchange of India (MCX) that has been in place since the beginning of this year has come to a halt. The contract has fallen sharply in the past week. The resistance at around ₹956 per kg is limiting the upside. The contract made a high of ₹956.4 on February 6 and has plummeted over 9 per cent, breaking below the psychological support level ₹900. The contract is currently trading at ₹869 per kg.

The corrective fall is likely to remain in place in the coming days. There is a strong likelihood of the contract extending its fall towards ₹839 – the 100-day moving average support level. Whether the contract reverses higher from ₹839 or not will decide the direction of the next move. A bounce from ₹839 will see the contract revisiting ₹900 levels. But a break below ₹839 will increase the likelihood of the fall extending towards ₹810 and ₹800.

The bias continues to remain positive and the 100-day moving average support is likely to provide base for the corrective fall and trigger an upward reversal.

Trading strategy

Traders with a high-risk appetite can go long on dips at ₹835. Stop-loss can be placed at ₹815 for the target of ₹885. Revise the stop-loss higher to ₹845 as soon as the contract moves up to ₹855.

Global trend

The Nickel (3-month forward) contract on the London Metal Exchange (LME) has come-off sharply after making a high of $13,350 on February 6. The contract has tumbled 7 per cent from this high and is currently trading at $12,410 per tonne. Key resistance at around $13,300 has held well and has triggered a reversal.

The near-term view remains negative. The LME-Nickel contract can fall to $12,000 or even $11,950 in the coming days.

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

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