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The price of nickel, which saw a sharp rally in the first half of October, witnessed a swift decline in price in the final week of the month. Consequently, the December futures on the Multi Commodity Exchange (MCX) fell from the high of ₹1,625.9 to mark a low of ₹1,472 in early November. But then, the decline was arrested and the contract started to move in the sideways range of ₹1,472 and ₹1,530.
Last week, the contract picked up considerable momentum resulting in the breakout of ₹1,530. On Wednesday, the contract closed above another important level of ₹1,575 as well, exhibiting strong bullish bias.
Supporting the same, the outstanding number of open interests (OIs) of all active nickel futures on the MCX increased to 2,590 contracts on Wednesday compared to 1,727 contracts a week ago. It is also higher compared to 1,614 contract by the end of October. The price rise along with increase in OIs is a bullish sign. Also, the contract has bounced off the 50-day moving average and indicators like the RSI and the MACD are showing fresh uptick.
Thus, the contract is likely to extend the rally, move past the prior high of ₹1,625.9 and touch ₹1,700 in the near-term. Yet, it can pause at ₹1,670 briefly.
So, traders can buy nickel December futures at current level of ₹1,600 and accumulate if it falls to ₹1,570. Initial stop-loss can be at ₹1,540. On the upside, if the contract reaches ₹1,670, revise stop-loss to ₹1,625. Liquidate longs at ₹1,700.
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