The October futures contract of nickel in Multi Commodity Exchange (MCX), which has been on a decline since early September, entered a consolidation phase before a couple of weeks. The contract was fluctuating between ₹1,040 and ₹1,080. Following this, it breached the upper limit of the price band last Friday and has been appreciating since then. This has turned the outlook positive.
Consequently, the price has crossed above ₹1,100, where the 50-day moving average lies. At ₹1,100 , the 50 per cent Fibonacci retracement level coincide and so the break out is quite significant and the likelihood of further rally is high.
Substantiating the positive bias, the daily relative strength index has been rising since the past week and has moved above the midpoint level of 50. The moving average convergence divergence indicator has turned its slope positive and is on the verge of entering the bullish zone.
On the upside, the contract can face resistances at ₹1,136 and ₹1,165. Traders can go long in declines with stop-loss at ₹1,065.