Since July, the price band of ₹1,535 and ₹1,550 was preventing the continuation of nickel contracts on the Multi Commodity Exchange (MCX) from moving beyond these levels. But a week ago, the contract managed to break out of this resistance band and hit a new high of ₹1,635.5 last week. Thereafter, the prices declined and the contract is currently trading near ₹1,550. Notably, the price bands of ₹1,535 and ₹1,550 have now turned support after the breakout.
The 50-day moving average is at ₹1,450, and as long as the contracts hold above it, the trend will be bullishly biased. This is confirmed by the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) on the daily chart as they remain in their respective positive territory. Thus the price correction cannot extend below ₹1,450. The contract is most likely to resume the uptrend from the current levels and retest the prior high of ₹1,635. A decisive break from this level could propel the contract up to ₹1,700 in the coming weeks.
Therefore, traders can consider going long (November futures) at the current level of ₹1,550 and add long if the price turns lower to ₹1,505. Place the starting stop-loss at ₹1,450. When the price reaches ₹1,635, liquidate 50 percent of the position. Shift the stop-loss upwards at ₹1,540 and try to exit the remaining ₹1,700.
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