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LME 3M Nickel Moving Average Analysis

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Jan. 14 2016, Updated 5:04 p.m. ET

Nickel is in a strong bearish situation

LME (London Metal Exchange) 3M nickel fell 25% in 2015. The oversupply situation along with weak global demand pulled nickel prices to multiyear lows in 2015.

As shown in the above graph, for the entirety of 2015, LME 3M nickel was below its 200-day moving average. Except for the three trading days between May 8 and May 12, nickel traded below its 100-day moving average throughout 2015, which is a bearish signal.

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For the entirety of 2015, nickel’s higher moving average prices were above its lower moving average prices (in the order of 200-day moving average, 100-day moving average, 50-day moving average), and they were all trending downward.[1. According to moving average analysis, the situation is very bearish when higher moving average prices are above lower moving average prices.]

Nickel fell 44% from its peak in 2015

The highest day’s close for LME 3M nickel in 2015 was $6,480 per metric ton on January 7. Since the peak in January, nickel fell by 44%. The lowest day’s close for nickel in 2015 was $8,300 per metric ton. Nickel is currently trading 4.8% above that amount.

Price levels of $12,000 per metric ton, $10,000 per metric ton, and $8,300 per metric ton were nickel’s prominent price levels in 2015, and they are expected to act as important support and resistance levels in 2016.

Nickel mining companies also lost a significant portion of their value in 2015. Major nickel miners Vale (VALE), Glencore (GLNCY), BHP Billiton (BHP), and Anglo American (AAL) fell 60%, 72%, 41.4%, and 75%, respectively.

Base metal ETFs were also in a downtrend for the majority of 2015. The SPDR S&P Metals & Mining ETF (XME) fell more than 50% in 2015.

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