Nickel prices, as forecasted last week, resumed their downtrend and updated the lows of 2023. In fact, both technical and fundamental data support further downward pressure on nickel's quotes. After moving below the 24,400 level, the "bears" may be targeting the 24,000 range again.
The industrial metals market came under downward pressure after China set its GDP growth target at 5% for 2023, and that turned out to be worse than analysts expected. However, no large-scale economic stimulus measures were announced. Since then, commodity prices have shown a significant decline.
TD Securities says that there is no sufficient evidence of a substantial increase in demand for industrial metals due to China's reopening. According to Daniel Gali, a senior commodity markets analyst, excess inventories may be holding back consumer appetite for purchasing industrial metals.
Nickel imports to China from Indonesia increased, while transaction volumes for stainless steel were low. Dealmaking on nickel has been sluggish in recent days. Tsingshan Group, one of China's largest nickel suppliers, disclosed a new bid price for the metal, being around 200 yuan per ton lower than the previous estimate. But the volume of new orders is inadequate.
Despite nickel going down for more than a month, the RSI is still far from being oversold, thus suggesting that the current move is likely to continue. The next downside target for nickel will be the 24,000 level. Stop loss can be placed near the falling trend line, now it is in the area of 24,700.
In case the price breaks below 24,000, there are no major downside targets until the levels of 22,700-22,800, which is a more distant prospect.
The following trading strategy can be suggested:
Sell nickel at the current price. Take profit – 24,000. Stop loss – 24,700.
Traders may also use Trailing stop instead of fixed Stop loss at their own discretion.
This content is for informational purposes only and is not intended to be investing advice.
