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As expected, the nickel futures contract on the Multi Commodity Exchange (MCX) has risen breaking above the key resistance level of ₹910 in last week. The contract has surged about 8 per cent in the past week and is currently trading at ₹968 per kg.
Outlook bullish
The bullish outlook remains intact. But, there is a possibility of an intermediate pull-back move as the contract is approaching a key near-term hurled at ₹970. Inability to breach this hurdle and a subsequent downward reversal can trigger a corrective fall to ₹950 initially. Further break below ₹950 can drag the contract lower to ₹910 in the short term. However, the corrective fall can find support at ₹910 as fresh buying interests is likely to emerge at lower levels. An upward reversal thereafter will have the potential to take the contract higher to ₹990 or ₹1,000 levels over the medium term.
Trading strategy
Medium-term traders who have taken long positions during the last week on a break above ₹910 can hold it with a revised stop-loss at ₹930 and for the target of ₹980. Move the stop-loss further higher to ₹945 as soon as the contract rallies to ₹970.
Traders who are not holding any positions can wait for dips and take fresh long positions at ₹915. Stop-loss can be placed at ₹880 for the target of ₹985.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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