Nickel had been in a steady downtrend since the beginning of February until the middle of March. The price has fallen by more than 25% over that period. But the metal managed to attract enough buyers, waiting for the price to rebound. Nickel started its recovery at the end of last week and reached its first rebound target, i.e. the 23.6% Fibonacci retracement level, corresponding to 24,300.
Some traders believe that the profit taken in 3 days might be enough to lock in their positions. That’s why a slight pullback from the current levels can be seen on the chart. The price surge on March 24 triggered a gap at the levels of 22,800-22,900, but it is likely to close in the near term. Both technical and fundamental indicators are now driving nickel prices towards a more subdued trend.
The International Nickel Study Group (INSG) anticipates that the global production of this metal will increase by 11.5% in 2023, reaching 3.39 million tons. Nickel consumption may also grow by 11.4%, to the level of 3.22 million tons. Therefore, the market is likely to have a surplus of 170 000 tons this year. Earlier, the surplus amounted to 109.9 thousand tons. This could lead to excess nickel output of more than 50%.
Despite China's rustless steel production being rather high, demand for nickel as the most important raw material remains weak. Some traders in Beijing tend to sell nickel at a discount, thus adding extra pressure on prices.
The target for a pullback in the metal’s price would be a gap closure in the range of 22,800-22,900. In order to mitigate risks, it is possible to close short positions slightly higher, at 23,000.
The following trading strategy can be suggested:
Sell nickel in the 23,800-24,000 range. Take profit – 23,000. Stop loss – 24,300.
Traders may also use Trailing stop instead of a fixed Stop loss at their discretion
This content is for informational purposes only and is not intended to be investing advice.
