The price of Nickel witnessed a sharp fall from its key resistance zones of Rs 1110 —Rs 1120 levels during the previous week. But, an examination of the chart above shows that the price pattern of Nickel since 29th Aug, 2011 on its weekly charts is taking shape of a bearish head and shoulder pattern with a declining neckline support. A head & shoulder price pattern combined with a declining neckline can bring about sharp corrections in the price of Nickel on a sustained break below the neckline support of Rs 970 levels.
The implied targets of the said pattern suggest that the price can correct to levels of levels of Rs 880 / Rs 750 levels in the short term to medium term time frame. Some of the other key technical factors that support the bearish argument are the fresh
sell signal given by the directional movement index which is an indication that the current downward movement will gain momentum and the prices have now closed below all its key moving averages.
We recommend traders to sell 50% between Rs 969--Rs 978 levels and again of rallies to Rs 1005--Rs 1012 levels with a stop loss placed above Rs 1021.40 levels for downside targets of Rs 925 / Rs 880 levels.
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