Supports can limit the downside: MCX-Nickel

Nickel futures contract on the Multi Commodity Exchange (MCX) has been oscillating around the psychological Rs 1,000 per kg mark over the last one week.

The contract tested resistance at around Rs 1,010 and has been struggling to breach this hurdle over the last one week. The contract has declined 1.4 per cent and is currently trading at Rs 991 per kg.

However, the outlook remains bullish. Key support is at Rs 980. Then cluster of supports are poised in between Rs 950-965 band which can limit the downside over the medium term.

Any down-move breaking below Rs 980 is likely to halt in the Rs 950-965 support region as fresh buying interest is likely to emerge at lower levels.

As such an eventual break above Rs 1,010 will boost the momentum. Such a break will take the MCX-Nickel futures contract higher to Rs 1,060 initially. Further break above Rs 1,060 will pave way for the next target of Rs 1,100 over the medium term.

Traders with a medium-term perspective and high-risk appetite can go long at current levels. Accumulate long positions on dips at Rs 980 and Rs 970.

Stop-loss can be placed at Rs 940 for the target of Rs 1,060. Revise the stop-loss higher to Rs 1,005 as soon as the contract moves up to Rs 1,020.

The short-term outlook will turn negative only if the contract declines below Rs 950 decisively. In such a scenario, a fall to Rs 910 or Rs 900 is possible. However, such a sharp fall looks less probable at the moment.

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

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