The continuous contract of nickel on the Multi Commodity Exchange (MCX) has been steadily gaining since March last year. However, the bulls were dealt a significant blow when the price reached ₹1,440 level in mid-February this year. That is, the uptrend, which was in place for almost a year, ended abruptly and there was a significant fall in price wherein it dropped from about ₹1,440 to ₹1,150 levels, thereby losing a little over 20 per cent within a couple of weeks. This is the biggest price correction in the past one year.

After the fall, the contract entered a brief period of consolidation following which it started to move up in early April. It gradually went up, but is being resisted at ₹1,350 since May. It is unable to move beyond that level for over a month and prolonged consolidation at these levels can open up the possibility of the trend turning downwards. The relative strength index, despite remaining above the mid-point level of 50, shows a fresh downtick. Also, the average directional index shows the bears are gaining ground and looking stronger than bulls.

Though there are signs of weakness, the contract (June expiry) has a considerable support at ₹1,300 where the 50-day moving average coincides. Hence, traders can wait for the contract to breach this support i.e., go short below ₹1,300. Stop-loss can be at ₹1,350 whereas ₹1,230 and ₹1,200 can be the potential target levels.

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