MCX-Nickel faces a key resistance level at ₹605

The Nickel futures contract on the Multi Commodity Exchange (MCX) has risen sharply in the past week. The contract made a low of ₹574.6a kg last Friday (May 5) and has surged about 5 per cent to trade at the current level of ₹602 .

A key resistance is ahead at ₹605 — the 21-day moving average. If the contract manages to breach this hurdle decisively, the downside pressure will ease. Such a break will also give an initial sign that the downtrend that has been in place since March is getting reversed. If the contract, then manages to sustain above the 21-day moving average, there is a strong likelihood of a rally to ₹635 or even ₹640 in the coming days.

Short-term traders with a big risk appetite can go long on a break above ₹605. A stop-loss can be placed at ₹590 for the target of ₹630. Revise the stop-loss higher to ₹610 as soon as the contract moves up to ₹620.

On the other hand, if the contract fails to break above the 21-day moving average resistance and reverses lower, it can decline to ₹580 and ₹575 again. In such a scenario, the downtrend will remain intact and keep the contract pressured for a fall to ₹550 in coming weeks.

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

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