MCX-Nickel likely to test key resistances

The Nickel futures contract on the Multi Commodity Exchange (MCX) has surged breaking above the resistance at ₹640 a kg as expected in the past week. The contract made a high of ₹660.8 on Monday and has been hovering at this high since then. It is currently trading at ₹653 . Key resistances are poised at ₹657 – the 38.2 per cent Fibonacci retracement level and ₹665 – the 200-day moving average. There is a strong likelihood of the upmove that has been in place over the last couple of months, coming to a halt in the coming days. Though a test of this resistance at ₹665 cannot be ruled out, the upside is expected to be capped at ₹665 in the near term. A corrective fall in the coming days looks more evident. Such a pull-back move can drag the contract lower to ₹640 or even ₹630 thereafter. An eventual upward reversal from ₹640 or ₹630 will take the contract higher to ₹660 and ₹665 levels once again.

Short-term traders with a high-risk appetite can go short on a reversal from ₹665. Stop-loss can be kept at ₹669 for the target of ₹650. Revise the stop-loss lower to ₹660 as soon as the contract moves down to ₹657.

The contract will need to break above ₹665 decisively to gain fresh momentum. Such a break will take it higher to ₹670 initially. Further break above ₹670 will increase the possibility of the upmove extending to ₹690 and ₹700 levels.

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

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