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December 2017 | Base Metals


Nickel: How low can it go?


The bearish technical head-and-shoulders pattern we warned about last week has been triggered. It warns of a potential plunge to $9,700 per tonne. However, looking at the big picture, this is hard to justify. The nickel market is running a supply deficit this year and will do so again next year, ferrous futures markets are buoyant, and still-robust Chinese economic data should be keeping demand from consumers and investors steady. At least this price pull-back wipes out all the LME Week electric vehicle hype, and rightly so because that is a story for deep into the 2020s, not now.

Head-and-shoulders triggered As we flagged up in last week’s report, nickel prices were tracing out a potentially bearish technical head-and-shoulders pattern, which, if triggered, threatened to open up a downside target of $9,704 per tonne for technical traders and speculators to aim for. We’ve been watching the technical charts closely since and, sure enough, the pattern was duly triggered and prices are falling away. As we write, they are sub-$11,000 per tonne for the first time since early October. This price pull-back wipes out all the LME Week electric vehicle hype, and rightly so because that is a story for deep into the 2020s, not now. So where to now for nickel prices in the hands of technical sellers? How low can it go? We dealt with that question last week,...

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