The London Metal Exchange (LME) resumed nickel trading on Monday, following the Asian market. Nickel warrants totalling 54 tons have been previously cancelled after Access World found stones instead of the metal in its warehouse. This resulted in a lack of confidence in the LME and the affected companies Trafigura and Stratton Metals.
Nickel trading opening is a major move to rebuild trust in the LME. There are hopes that extended hours might boost trading volumes, thus facilitating the process of arbitrage transactions between London and Shanghai contracts. At this point, activity in the nickel market remains well below pre-crisis levels, while insufficient liquidity contributes to periodic price spikes.
The LME needs some time to restore its reputation. If there is a high trading activity in the market, this may lead to the stability of nickel prices. But it is likely to form a long-lasting upward correction.
Nickel started to show a rising momentum after the price came out of the downtrend on the 4-hour timeframe. Looking at the 1-hour timeframe, it can be seen how the price slowed down while forming an opportunity to break out of the corrective rally, when it came out with a gap.
By examining the D1 timeframe, one can notice that a new wave is forming. This wave is essential, when the price breaks out of the downtrend. In fact, there is a bullish pullback ahead. The RSI oscillator has already pointed to free purchases, rolling back from the oversold zone. And that’s why the target would be around 27 500, or in the area where the previous growth trend started. The support line, broken a month ago, has now become a resistance one.
Following the price's exit from the H1 timeframe correction, nickel is only getting into an uptrend, being in the range (22 945 - 24 245) of profitable purchases. Stop-Loss can be placed beyond the previous correction limits.
A signal might be the following:
Nickel's long-term outlook is a buy one.
The target is at the level of 27 500.
Part of the profit should be fixed around 9 130.
Stop Loss can be placed near 22 050.
“Bullish” trend has a medium-term perspective, so it is worth choosing a trading volume not higher than 1% of one's balance.