The downtrend in the Nickel futures contract on the Multi Commodity Exchange (MCX) remains intact. The contract has been beaten down consistently since mid-October. The contract made a high of ₹963.3 per kg in October and has been falling continuously since then. This downtrend has intensified after the contract declined below the key support level of ₹840 earlier this month. The MCX-Nickel futures contract tumbled 3 per cent in the past week and is currently trading at ₹790 per kg.

The downtrend is intact. However, there is a possibility of an intermediate bounce in the near term. The key 100-week moving average support is near current levels at ₹789. If the contract manages to bounce from this support, a corrective rally to ₹830 or ₹840 is likely in the near term. However, the region between ₹830-₹840 will act as a strong resistance and will cap the upside. Fresh sellers are likely to emerge at higher levels and restrict the upmove.

As such, a pull-back from the ₹830-₹840 resistance region and a subsequent break below ₹789 will see the downtrend extending towards ₹745 and ₹740 in the coming weeks.

On the global front, the Nickel (3-month forward) contract on the London Metal Exchange (LME) is also on a strong downtrend. The contract extended its downmove as expected in the past week to test the psychological level of $11,000 per tonne. It is currently trading at $11,095 per tonne. If it sustains above $11,000, an upmove to $11,500 is possible in the near term. But a strong break below $11,000 will increase the downside pressure and will drag the contract lower to $10,600 and $10,550 in the coming weeks.

Trading strategy

Traders with a medium-term perspective can go short in the MCX-Nickel futures contract on rallies at ₹805,₹820 and ₹830. Stop-loss can be placed at ₹845 for the target of ₹745. Revise the stop-loss lower to ₹790 as soon as the contract moves down to ₹780.

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

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