Nickel Seen Falling Toward Four-Year Low: Technical Analysis

Nickel, the worst performing industrial metal on the London Metal Exchange this year, may extend its decline toward a four-year low of $13,200 a metric ton, according to technical analysis by Societe Generale SA.

Nickel formed a so-called bearish channel as it retreated from a 10-week high of $15,001 on Aug. 16. The decline took prices below a support line drawn from July 9, when it reached a four-year low, at about $13,850 to $13,800.

Falling below the support line “will add negative pressure towards $13,450, possibly even $13,200,” Stephanie Aymes, an analyst at the bank in London, said in a report yesterday.

Nickel traded at $13,713 by 6:21 a.m. on the LME and is down 20 percent this year. The metal, used in stainless steel, was last at $13,200 in May 2009. Supply may outpace demand by 111,000 tons this year and 81,000 tons next year, according to Barclays Plc.

In technical analysis, investors and analysts use charts of trading patterns and prices to predict changes in a security, commodity, currency or index. Support levels are marked by clusters of buy orders, according to technical analysts, who say that past moves may be used to predict trends.

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