Since early October, the November futures contract of nickel on Multi Commodity Exchange (MCX) has been in an uptrend.
However, last week, after marking a high of ₹1,207.9 the contract began to moderate and it is currently trading around ₹1,145. This is a key support for the contract since the 38.2 per cent retracement level of the prior rally and the 21-day moving average coincide at this price level.
So, if the bulls regain traction and advances from here, it is likely to face a hindrance at ₹1,200 level. A decisive break out of this level can lift the contract to ₹1,236. But in case if contract slips below the support of ₹1,145, it can be expected to decline to ₹1,108. Subsequent support is at ₹1,080.
Following the recent price moderation, the daily relative strength index has moved downwards; but it remains in the bullish region. Whereas the moving average convergence divergence indicator is flat.
Since ₹1,145 is a strong support, traders can be cautiously bullish and initiate fresh long positions with stop-loss at ₹1,108.