Chart of the day: Time for rethink
During the fourth quarter of last year,the volume of Shanghai aluminium futures contracts exploded, averaging four times the norm earlier that year. This underlines the fact that an important long-term low was in the making and, while lower than we had expected (an extension), this can be blamed on extreme volatility (double the long-term norm). Things have steadied considerably now we are back inside the Andrews pitchfork and two consecutive weekly closes above horizontal resistance at 11,175 yuan per tonne has seen moving averages cross to bullish. Short-covering over the coming month should see the front contract rally to the centre of the secular pitchfork, then possibly stalling against the descending Ichimoku cloud. Rethink time for many entrenched positions.
Nicole Elliott is a technical analyst