Near-term outlook is bullish for MCX-Nickel

The nickel futures contract on the Multi Commodity Exchange (MCX) has been moving in a broad sideways range for more than two months. The contract has been rangebound between ₹820 and ₹910 a kg since February. Within this range, the contract made a low of ₹830 in the last week of March and has been moving higher since then. The contract has surged over 8 per cent from this low and is currently trading at ₹898 per kg.

Outlook

The near-term outlook is bullish. The contract can extend its upmove towards ₹900 and ₹910 – the upper end of the range, in the coming days. But whether the contract breaks above ₹910 or not will decide the next move. Inability to break above ₹910 and a subsequent pull-back move will keep the sideways move intact. In such a scenario, the contract can fall towards ₹880 or ₹870 in the short term.

On the other hand, if the MCX-Nickel futures contract manages to breach ₹910 decisively, it can gain fresh momentum. Such a break will then increase the likelihood of the contract rallying to ₹940 or ₹950. This will also leave the medium-term outlook bullish for the contract to target ₹1,000 levels.

The outlook will turn negative only if the contract breaks below ₹820 and the contract can decline to ₹805 or ₹800.

The bias on the chart is positive as the region between ₹830 and ₹820 appears to be a strong support zone. As such a break below ₹820 looks less probable.

Trading strategy

Traders with a medium-term perspective can go long on a break above ₹910. Stop-loss can be placed at ₹870 for the target of ₹980. Revise the stop-loss higher to ₹930 as soon as the contract moves up to ₹945.

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

Read the rest of this article by Signing up for Portfolio.It's completely free!

What You'll Get





Related

MORE FROM BUSINESSLINE


 Getting recommendations just for you...
This article is closed for comments.
Please Email the Editor