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NICKEL: Lows Climb Up as It Could Turn Neutral in Middle Term

Inflation and Recession
Summary:

London Metal Exchange (LME) nickel stocks were flat. The daily increase of nickel has expanded to 2.00%, and now it is reported at US$26,250.00 per ton.

Buy NICKEL
End Time
CLOSED

26907.475

ENTRY PRICE

30270.000

TGT PRICE

25000.000

SL PRICE

28554.525 -665.750 -2.28%

306450

Points

Loss

25000.000

SL PRICE

26601.025

CLOSING

26907.475

ENTRY PRICE

30270.000

TGT PRICE

Fundamentals

The price of ferronickel continued to rise this month. On the supply side, the output of ferronickel increased slightly as compared with last month, while the impact of Indonesia's return still exists. However, the price of nickel ore at the cost side remained high, which put pressure on the profits of the ferronickel plant. At present, the ferronickel factories' procurement of nickel ore remains deadlocked.
On the demand side, in the first half of October, the price of stainless steel continued to rise, and the price hikes drove large steel factories to step up their purchases. However, in the last ten days, the price of stainless steel has dropped. Small and medium-sized steel factories have turned to a wait-and-see attitude, and their purchases of ferronickel are relatively limited. On the whole, under the background of a slight drop in profit, the iron factories are actively supporting the price. Whether the price of nickel and iron can rise in the future depends on the purchase of steel factories.
Overall, under the policy of using liquidity instruments to stabilize economic growth in a timely manner, the market showed certain demand expectations. Therefore, we can see that although the pressure on the prevention and control of the COVID-19 pandemic in China is increasing recently, the price of most industrial products, including the price of nickel, has been strong and does not seem to highlight the impact of the COVID-19 pandemic.
Meanwhile, electrolytic nickel's inventory in China is still relatively low although it has been accumulated. In the futures market, we believe that there will be a gamble between expectation and reality, the difference is that this time the expectation turns strong while the reality turns weak. The strong expectation mainly comes from the alleviation of the impact brought by the COVID-19 pandemic in the next year to facilitate economic recovery, etc. It is expected that this gamble will continue in days to come.
NICKEL: Lows Climb Up as It Could Turn Neutral in Middle Term_1

Technical Analysis

LME nickel continued to show a higher trend within the 4H timeframe as its price appeared to have found sufficient buying in the middle of the channel that it is interested in. Meanwhile, Fibonacci Extensions showed that there was still room for further upward movement after the intraday price was significantly higher. The target range is US$27730. Stronger bullish momentum could push the nickel price to US$28,640.
Currently, the price is also finding support at the 20-day SMA dynamic inflection point. Yesterday's break below the medium-term central average of US$25,000 and no further move lower suggests that the path of least short-term resistance is to the upside, or that the uptrend is more likely to gain sufficient momentum than to reverse. Meanwhile, stochastics appear to be rising, further confirming that the bulls are ready to return.However, given the complexity of the gamble between bulls and bears, (to be on the safe side) it is recommended to go short at the highs.

Trading Recommendations

Trading direction: Short
Entry price: 26760
Target price: 30270
Stop loss: 25000
Deadline: 2022-12-13 23:55:00
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Eva Chen

Analyst

Master of Economics, 8 years in the financial industry, CFA holder, joined HSBC (Hong Kong) Bank in 2013 after graduating from the University of California, USA in the Investment Research and Markets Department. With years of financial market experience and trading experience, having provided excellent investment advice to many brokerages, entity derivatives importers and clients in Greater China.

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Focus on

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