Nickel futures contract on the Multi Commodity Exchange (MCX) fell in the past week as expected. The resistance at Rs 1,050 per kg capped the upside and the contract reversed sharply lower after making a high of Rs 1,057.9 on May 13.

The contract tumbled 6 per cent from this high to make a low of Rs 993.8 on Tuesday. However, it has bounced higher from this low and is currently trading at Rs 1,006 per kg.

A crucial trend deciding support is at Rs 990, which is holding well as of now. Whether the contract sustains above this support or not will decide the next move.

As long as the contract remains above Rs 990, a bounce-back move to Rs 1,020 or Rs 1,025 is likely in the near term. Inability to breach Rs 1,025 can pull the contract lower again.

In that case, a range bound move between Rs 990 and Rs 1,025 is possible for some time. But, if the MCX-Nickel futures contract breaks above Rs 1,025 decisively, the downside pressure will ease. Such a break will pave way for a fresh rally to Rs 1,060.

On the other hand, if the MCX-Nickel futures contract breaks below Rs 990 in the coming days, the downside pressure will increase. Such a break will drag the contract lower to Rs 970. Further break below ₹970, will then increase the likelihood of the contract tumbling to Rs 940.

Trading strategy

Short-term traders, who have taken long positions at Rs 1,010 and at Rs 1,005, can hold it. Retain the stop-loss at Rs 985. Revise the stop-loss higher to Rs 1,015 as soon as the contract moves to Rs 1,020.

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

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