LME Nickel

Nickel has been trading within the range of a bearish pennant pattern since falling to $16495 in early February. This is a continuation pattern that should break lower. The lower threshold of the pennant was broken on March 9, but prices failed to close below the trendline. This was a false breakout and dampened the odds for a continued decline. Additionally, the pattern’s length, compared with the prior decline from $19160, and the recent close above $17662, which is the smaller than (0.618) the target of the wave up from $16800 (violet), warns that the pattern will fail. This is a nearly 50/50 call for nickel in the coming weeks, and the key levels to watch are $16982 and $18259. A close beyond either should determine the direction of the next move.

With that said, the outlook for nickel leans slightly bearish. Prices are still trading near the lower trendline of the pennant, and an intraday double top at $17780 formed on March 12. Closing below $17455 will confirm the intraday double top and call for a break lower out of the pennant to challenge the $16982 smaller than target of the wave down from $18155 (light green). Settling below this will confirm a breakout and call for this wave’s equal to target and, more importantly, the smaller than target of the primary wave down from $19160 (green) at $16495 to be tested. Closing below $16495 will open the way for $15919 and eventually the primary wave’s $15478 equal to (1.00) target.

Nonetheless, given the close above the $17662 smaller than target of the wave up from $16800 (violet) and the recent close back above the 20- and 50-day moving averages, there is a reasonable chance for a test of key resistance at $18259 first. This is the most confluent level on the chart and is near the upper trendline of the pennant. Settling above $18259 will shift the odds in favor of nickel rising to $18912 and higher.

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LME Tin

Tin held the $58190 target of the confirmed double bottom that formed between the $44345 and $44500 swing lows on a closing basis. Subsequently, a double top between the $59040 and $58900 swing highs around $59000 formed. The move down from $58900 took out the smaller than target of the wave down from $59040 (green) and the 62 percent retracement of the rise from $44345 (blue). This implies that tin will eventually test the $44345 confirmation point of the double top. The connection to $44345 is made through a minor but confluent target at $45789 based on the waves down from $58900 (not shown). Settling below $44345, which is also a highly confluent target, will confirm the double top, opening the way for $41714 and lower.

Tin finally settled below the 20- and 50-day moving averages on March 12, but it has been a struggle to do so for the last few days. The close below the 50-day moving average was marginal, so there is still a chance that this will prove to be an area of support. Should prices rise again and close above the smaller than target of the wave up from $46800 (violet) and the 38 percent retracement from $58900 (magenta) at $51385, look for a test of the equal to target and 50 percent retracement at $52855. This then connects to the intermediate (1.382) target and 62 percent retracement at $54471 and then key resistance at $56093. The $56093 level is key because this is the larger than (1.618) target of the wave up from $46800 and the smaller than target of the largest wave up from $44345 (medium purple). Settling above $56093 will call for a move above the $59000 double top to challenge $60174 and higher.

LME Zinc

Zinc broke lower out of a symmetrical triangle on March 5 but settled back above the lower threshold of the pattern the next day. This was a false breakout and warned that zinc will continue to rise. However, the subsequent move up tested and held the 38 percent retracement of the decline from $3573.5 (magenta) at $3356 on a closing basis. Since then, prices have fallen for the past two days and settled back below the 20-day moving average. The 50-day moving average was held on March 12, but the wave formation favors a test of $3241. This objective is split between the smaller than target of the wave down from $3431.5 (light green) and the equal to target of the wave down from $3458.5 (dark cyan) within the allowable +/- $19 tolerance. Note that the exact $3226 equal to target of the wave down from $3458.5 has already been tested and held on a closing basis. Therefore, a sustained close below this area will confirm a break lower out of the symmetrical triangle, clearing the way for a test of $3170 and eventually the $3110 equal to target of the primary wave down from $3573.5 (green).

Should zinc rally again and close above the 38 percent retracement from $3573.5 (magenta) at $3356, look for a test of key resistance at $3392. This is the 50 percent retracement and the smaller than target of the wave up from $3221 (violet). Settling above $3392 will confirm a break higher out of the symmetrical triangle and put the odds in favor of zinc rising to $3445 and then another highly confluent area of resistance around $3505 that has already been challenged and held on a closing basis.

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