The Nickel futures contract on the Multi Commodity Exchange of India (MCX) has reversed higher in the past week. After consolidating in a narrow range between ₹750 and ₹770 per kg for about a week., the contract has surged breaking the range above ₹770. The contract made a high of ₹804.4 per kg on Tuesday but has come-off from there. It is currently trading at ₹781 per kg.

The price action over the last couple of days indicate that the contract is not gaining strength. The pull-back from ₹804 also signals that the MCX-Nickel futures contract is not getting strong follow-through buyers to take it decisively above the psychological level of ₹800. This leaves the near-term outlook mixed for the contract.

The price action in the coming days will need a close watch which may give a cue on the next direction of move.

The level of ₹770 may now act as a good support. As long as the contract sustains above ₹770, the possibility is high of the contract breaching above ₹800 in the coming days. Such a break above ₹800 can take the contract higher to ₹825 – a key trendline resistance. A strong break above ₹825 will then increase the likelihood of the contract extending its rally to ₹865 and ₹870. But, a pull-back from ₹825 can drag the MCX-Nickel futures contract lower to ₹800 and ₹770 again.

The outlook for the contract will turn negative only if it declines below ₹750. The next target is ₹735. However, such a fall breaking below ₹750 looks less probable at the moment.

Trading strategy

Short-term traders with high-risk appetite can go long at current levels and also on dips at ₹773. Stop-loss can be placed at ₹755 for the target of ₹820. Revise the stop-loss higher to ₹790 as soon as the contract moves up to ₹803.

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

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