Nickel settled up 0.53% at 883.60 boosted by Chinese investors returning from the week-long New Year holiday. Nickel swung to gains last week on combination of restricted supply and projections of strong demand this year. Recently, Indonesia, the world's top exporter of nickel ore, imposed a complete ban on its metal ore exports. At the same time, MEPS Ltd. and Macquarie both expect China's stainless steel production to jump this year. MEPS Ltd. calls for a 6.8% increase in crude stainless steel production to 19.3 million tonnes, while Macquarie predicts 10-11% jump in China's output. Nickel is a key component for stainless steel production. Markets will focus on Janet Yellen's hearing late on Tuesday. This is Yellen's first hearing as chair of the Federal Reserve in which she will present her testimony on the monetary policy and US economic prospect. Markets are still dubious about whether the US Federal Reserve will carry on tapering its bond purchasing program in the face of disappointing economic data in almost two months. Transactions for LME base metals overnight decreased, a sign of caution among investors. Market sentiment will be mostly bearish on Tuesday, and technical indicators show that LME prices still face immense upside pressure. Technically market is under short covering as market has witnessed drop in open interest by -8.25% to settled at 4661 while prices up 4.7 rupee, now Nickel is getting support at 878.3 and below same could see a test of 873 level, And resistance is now likely to be seen at 891.8, a move above could see prices testing 900.

Trading Ideas:

Nickel trading range for the day is 873-900.

Nickel ended with gains on mounting concern that Indonesia, won't relax its ban on unprocessed-ore exports.

US unemployment continued to fall to 113,000, lower than expectations, and employment rose MoM but fell short of expectations

The Fed tapered its monthly asset purchase program by another USD10 billion to USD65 billion a month at its last policy meeting.