Chart of the day: Rubber bounces in on the act
Shanghai rubber futures were trading on good volume at last year’s low, which was not surprising because that was also the low after 2008’s slump. From a potential-double-bottom chart pattern at 9,250 yuan per tonne, what is interesting is that observed volatility has climbed steadily and is currently towards the higher end of the norm for this contract. Horizontal resistance at 11,800 yuan has held for the past two weeks but Friday’s close, almost the highest since last summer, suggests it will not take much to trigger a burst higher. The Ichimoku cloud is relatively thin, and as momentum is bullish, a short squeeze with a measured target at 13,400 yuan or 14,400 yuan is possible.
Nicole Elliott is a technical analyst