Bears seem to have taken a pause as the October futures contract of nickel in the Multi Commodity Exchange (MCX), which has been on a downtrend since early September, has entered a sideways trend. In other words, the contract has largely been fluctuating between ₹1,040 and ₹1,080 for the last couple of weeks.
This indicates that the bears are losing momentum and further consolidation will increase the likelihood of a bullish reversal.
But the daily relative strength index, though showing a fresh uptick, lies below the midpoint level of 50 and the moving average convergence-divergence indicator is hovering in the bearish territory. Hence, the contract should breach the resistance at ₹1,080 in order to turn the outlook in its favour.
Immediately above ₹1,080, the contract can face a hurdle at ₹1,100. But a breakout will most likely take the price beyond that level. Subsequent resistance is at ₹1,135.
Since there are indications of a recovery, traders can go long in the contract with a stop-loss at ₹1,040 if it breaks out of the resistance at ₹1,080.
Note: The recommendations are based on technical analysis.
There is a risk of loss in trading