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The nickel futures contract on the Multi Commodity Exchange (MCX) was stuck inside a narrow sideways range between ₹680 and ₹700 a kg in the past week. The immediate outlook is not clear. A breakout on either side will decide the next leg of move for it.
Traders can stay out of the market at the moment and wait for a clear trend and a trade signal to emerge.
If the contract breaks the range below ₹680, it can fall to test the 200-day moving average support at ₹669. Further fall below ₹669 can drag the contract lower to the next supports at ₹645 — the 55-week moving average or ₹635 — a trend line support. The downside in the contract is expected to be limited to this ₹645-635 support zone and a reversal is possible from there. Such a reversal may have the potential to take the contract higher to ₹700 levels once again. It will also then be a good opportunity for traders to initiate long positions.
On the other hand, if the contract breaks above ₹700 this week it can rise to ₹708 – the 21-week moving average resistance. A strong break above this hurdle is needed for the downside pressure to ease. Such a break can boost the bullish momentum and take the contract higher to ₹750 levels thereafter.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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