By Nicholas Larkin and Anna Stablum June 11 (Bloomberg) -- Nickel may drop to $13,600 a metric ton, implying a 29 percent slide from current prices, after falling through a trend line, according to technical analysis by independent analyst Jim Stellakis. The attached chart shows nickel slid below a 14-month trend line and may replicate a drop similar to the decline from late April to early May, a move known as a “flag pattern.” The second attached chart shows similar patterns since October 2008. Nickel tends “to move in a direction, has a correction or pause, and then has a second leg that tends to equal the first,” Stellakis, founder of New York-based research firm Technical Alpha, said in an interview. “The trend line was broken, which was a negative. This is a warning that the market is not in the same supply-and-demand state it once was.” Nickel for three-month delivery on the London Metal Exchange dropped 44 percent since reaching a 23-month high on April 16 as concern about Europe’s debt crisis intensified and China implemented measures to cool its property market, potentially curbing demand. The metal traded at $19,130 a ton at 6:35 a.m. local time. Nickel has added 3.3 percent in 2010, the only gain among the six main metals traded on the LME. It’s also the only main LME metal forecast to be in deficit this year, according to Bank of America Merrill Lynch. About two-thirds of nickel production is used in stainless steel. If prices fall below the February low of $16,975 a ton, “it puts an end to the long-term uptrend,” said Stellakis, who spoke yesterday. In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index. To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Anna Stablum in London at astablum@bloomberg.net.

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