The Nickel futures contract on the Multi Commodity Exchange (MCX) has reversed sharply lower after surging initially in the past week. The contract, which made a high of ₹786 per kg on Monday, has reversed sharply lower from there.

The contract fell 2.8 per cent on Tuesday to make a low of ₹763.2 per kg. It has bounced higher from this low and is currently trading at ₹767. However, with resistance at ₹775, the immediate outlook is negative. Inability to break above ₹775 can keep the contract under pressure in the near-term.

A fall to ₹755 or ₹750 is likely as long as the contract trades below ₹775. Whether the contract reverses higher again from ₹750 or not will decide the next leg of move.

A fall below ₹750 will increase the likelihood of the contract extending its downmove to ₹735 or even lower. On the other hand, if the MCX-Nickel futures contract manages to reverse higher from ₹750, the downside pressure may ease.

In such a scenario, a rise to revisit ₹780 and ₹785 is possible. A strong break above ₹785 will enhance the possibility of the contract targeting ₹800 or even ₹815 over the medium-term.

Traders with a short-term perspective can wait for dips and go long if the contract reverses higher from ₹750. Stop-loss can be placed at ₹735 for the target of ₹780.

Revise the stop-loss higher to ₹755 as soon as the contract moves up to ₹763.

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

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