Since early October, the December futures contract of nickel on the Multi Commodity Exchange (MCX) has been heading north where the price advanced from about ₹1,065. However, since mid-November, it has been oscillating between ₹1,180 and ₹1,220.
But last week, the contract regained traction and broke out of the range. On Tuesday, it registered a high of ₹1,335.5 and it currently hovering around ₹1,300. The price is well above the 21-day moving average (DMA) and the moving average convergence divergence indicator on the daily chart is indicating a strong bullish momentum. Moreover, the daily relative strength index stays in the bullish zone. These are indications of considerable upward momentum and if the contract rallies past its prior high, it can appreciate to ₹1,350. Above that level, it can rally to ₹1,375.
Considering the risk-reward ratio, even though the trend is bullish, one can wait for now rather than initiating fresh long positions at current levels. That is, traders can either buy the contract with stop-loss at ₹1,230 if the price softens to ₹1,270 or buy with stop-loss at ₹1,300 if the contract breaks out of ₹1,335.