SINGAPORE: LME nickel may test a resistance at $19,665 in four weeks, a break above which could lead to a gain to $21,069.
The resistance is identified as the 100% projection level of an upward wave C from $10,525. The preceding wave A could be divided into three waves. The third wave labelled c is roughly 1.618 times the length of the first wave labelled a.
Such a ratio may be applied to the relation between the wave C and the wave A, which means the wave C may travel to about $25,314.
A retracement analysis on the downtrend from $29,425 to $7,550 reveals a break above the 50% retracement at $18,488. The metal is expected to gain more to $21,069, which will be targeted when it breaks the nearest resistance at $19,665.
Even though the current bullish momentum looks pretty strong, it is doubtful if nickel could overcome the barrier at $19,665 in its first attempt.
Chances are it may pause around this resistance and start a correction towards $18,488. The correction will be classified as a pullback towards $18,488. Upon the completion of this pullback, the wave C would resume.
* Wang Tao is a Reuters market analyst for commodities and energy technicals. The views expressed are his own.
No information in this analysis should be considered as being business, financial or legal advice. Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses. **