It was a bad week for the Nickel futures contract on the Multi Commodity Exchange (MCX). The contract has plummeted 9 per cent in the past week.
The sharp fall dragged the contract well below the key ₹800-780 per kg support zone, which was expected to hold. The long positions recommended last week have been stopped out in the sudden fall.
The down-move can extend to ₹740 in the near-term. Strong support is seen in the ₹740-730 region, which is likely to halt the current fall.
A bounce-back from this level can take the contract higher to ₹770 and ₹780 again.
The inability to break above ₹780 can drag the contract lower and keep it range-bound between ₹730 and ₹780 for some time.
But if the contract manages to breach above ₹780 decisively, the relief rally can extend to ₹800 or ₹810.
Short-term traders with a high-risk appetite can go long on dips at ₹741. Accumulate long positions at ₹735.
Keep the stop-loss at ₹720 for the target of ₹780. Revise the stop-loss higher to ₹745 as soon as the contract moves up to ₹755.
On the other hand, the contract will come under more selling pressure if it breaks below ₹730. Such a break can drag the contract lower to ₹705 or ₹700 thereafter.
But since the contract has fallen sharply in a short span of time, the above mentioned fall to ₹700 is less probable.
As such there is a strong likelihood for a corrective rally from ₹740-730 region targeting ₹770-780 levels.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
KEYWORDS: nickel, technical charts, mcx, stop-loss, fundamentals
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