Nickel’s Bounce to Continue

There is currently a rebound opportunity on Nickel. The bearish trend has weakened. On a daily basis, the price action has just operated a breakout, which is traditionally a bullish signal. Indeed, it has crossed above the upper limit of a bearish channel which was in place since early August (red bearish channel on the chart).

Four significant lower highs have been posted during the last 2 months since Nickel prices reached the high of the year at $21,070 per tonne (point B). Despite regular lower lows, the bearish channel was narrowing and a bounce has eventually cleared the immediate resistance.

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Because the upper band of the channel (the resistance line) has been significantly tested and validated several times, the bullish signal which has just been triggered is likely to be strong.

It appears that this bearish channel may “only” be a correction of the strong rally occurred between April and August this year. If you consider the two extreme points of this 4-month bullish trend (points A and B), it’s a rise of 124%. That’s why a technical correction was expected, but this may not cancel the medium-term positive direction of the price action.

The Fibonacci retracements applied to the trend between points A and B show that the price action recently bounced exactly on the level of the 38.2% ratio (point C). This confirms that the near-term is on the upside.

The Relative Strength Index (RSI) confirms this bullish signal as it perfectly replicates the price action. The RSI has cleared its descending resistance line and curved upward sharply. The 30-day Commodity Channel Index is also well oriented after it reached a new low and bounced back.

The very first objective now is the level of $18,975, a previous intermediary low that might become a short-term new high. However the main target is the high of the year just above $21,000.

Good investing,
Gabriel