Chart of the day: Shanghai steel shines
Just as we had thought six weeks ago, the lagging line of the Ichimoku cloud chart system of the Shanghai steel rebar futures did get a lift from the horizontal top of the large triangle pattern. Then early in August, not only did we get the strong close we hoped for, but with a Marabuzo candle, too, which was a bullish sign. Now we have reached the first measured target from the height of the right-angled triangle at 4,500 yuan (US$688.61) per tonne and, though overbought, strong bullish momentum means it should probably continue on to the final Fibonacci retracement resistance at 4,625 yuan. Because moving averages are still steadily positive, we remind that a squeeze to 4,900 to 5,000 yuan cannot be ruled out – even though position trimming has taken place during the summer months.
Nicole Elliott is a technical analyst