The June month futures contract of nickel on the Multi Commodity Exchange of India (MCX) increased one per cent to ₹1,333 per kg on Wednesday.
The contract is now testing short-term resistance at ₹1,335 levels. A conclusive breach of this hurdle will reinforce the bullish momentum and underpin the uptrend that started from the significant base at ₹1,145 levels in late March this year. Following a minor corrective decline in mid-May, the contract found support at ₹1,217 and now trades well above the 21- and 50-day moving averages. The daily relative strength index is on the brink of entering the bullish zone from the neutral region.
An emphatic break above the current resistance level of ₹1,335 will strengthen the up-move and take the contract northwards to ₹1,400 and then to ₹1,450 over the medium term. That said, failure to move beyond the aforementioned resistance can pull the contract down to the immediate support level of ₹1,300. A further decline below this support can drag the contract lower to ₹1,275 and then to ₹1,225 levels.
Traders should tread with caution and consider taking fresh long positions on a strong rally above ₹1,335 levels with a fixed stop-loss.
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