Nickel futures contract on the Multi Commodity Exchange (MCX) fell initially in the past week. However, the down move was shortlived, and the contract has reversed sharply higher after recording a low of ₹853.5 per kg on March 8. The contract has surged over 6 per cent from this low and is currently trading at ₹905.6 per kg.
Bullish outlook
The support at around ₹850 is holding well and last week’s strong bounce from this support level is encouraging. Immediate resistance is at ₹908 which is likely to be breached. Such a break can take the MCX-Nickel futures contract higher to ₹920 or ₹925 in the short-term. A strong break and a decisive close above ₹925 will then pave way for the next targets of ₹940 and ₹950. The region around ₹850 will continue to remain as a crucial support. The contract will come under pressure only if it breaks decisively below ₹850. Such a break will increase the likelihood of the contract falling towards ₹800 on the back of profit booking. However, such a sharp fall breaking below ₹850, looks less probable at the moment.
Trade strategy
Medium-term traders, who have taken long positions last week on dips at ₹860, can hold it with the revised stop-loss at ₹885 and for the target of ₹940. Move the stop-loss further higher to ₹915 as soon as the contract touches ₹922.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading