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The Nickel futures contract on the Multi Commodity Exchange (MCX) had reversed lower in the past week, contrary to an expectation for a strong rally. The contract made a high of ₹908 per kg on March 14 and has come-off from there. It has fallen over 3 per cent from this high and is currently trading at ₹875 per kg.
Stuck in a sideways range
The MCX-Nickel futures contract has been stuck in a narrow sideways range between ₹850 and ₹908 over the last few weeks. Within this range, the contract is moving down after testing the upper end of the range. An intermediate resistance is at ₹885. As long as the contract trades below this hurdle, there is a strong likelihood of it trending down towards ₹860 and ₹850 in the coming days. An upward reversal from ₹850 will keep the sideways range intact and will take the contract higher to ₹880 and ₹900 levels again.
A breakout on either side of ₹850 or ₹908 will decide the next trend for the MCX-Nickel futures contract. A strong break below ₹850 will bring renewed downside pressure. Such a break can drag it to ₹835 or ₹830. On the other hand, if the contract manages to surpass the resistance at ₹908, it can gain fresh momentum. In such a scenario, the contract can rally to ₹930 and ₹935.
Trading strategy
Traders can stay out of the market until the range breakout gives a clear cue on the next trend.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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