Marex Spectron's Market Analytics team detects reasons for optimism in Nickel.
Guy Wolf, Global Head of Market Analytics at Marex Spectron, said: "It would take a brave man to call the lows in Nickel whilst warehouse stocks continue to climb, but we have possibly seen the first minor piece of evidence that we may be close to the floor. I would emphasise the word 'minor' in that we are at levels that are already consistent with the 'Great Retracement' of 2004 where Nickel also fell 40% during a multi-year bull market trend.
"As we pointed out last year, when the extreme speculative length built in Nickel there was really no evidence of it being a sustainable bear market at that point. The note we published on 24th September summarised this but the key point was that there were no signs of demand in our data. In fact, the bulk of the rally had been accompanied by heavy supply - a sure sign of a speculatively driven rally that would eventually run out of ammo.
"Since then, we have done nothing but watch Nickel as it continued to offer no evidence at all that the supply was abating. But we have used the 2004 period as a guide to the quantum of retracement that may be considered normal. We are right at the lows of that range - not that there is any specific reason why that should repeat but it is enough to perhaps give some confidence to buyers that the majority of any downside is behind us."
No need to be so bearish near the bottom IMO.
SIR Price at posting:
$2.50 Sentiment: Buy Disclosure: Held
