Chart of the day: High jinks in aluminium
As we wrote in June, the most active aluminium contract (for October delivery) on the Shanghai Futures Exchange this week burst through the mean regression. Very good volume, rising open interest and forward prices in contango to July 2018 suggest many believe the outlook for this base metal is rosy. While the long-term picture remains positive, with all aspects of the weekly Ichimoku cloud chart system being bullish (as are long-term moving averages), we would tread carefully over the next few weeks. The market is more overbought than it has been in three years and it has stalled at one standard deviation above its mean regression, suggesting time for consolidation.
Nicole Elliott is a technical analyst