Chart of the day: Steel still stellar
Having comfortably met our first target at 3,500 yuan (US$509.50) per tonne, Shanghai steel rebar futures barely paused for breath even though that was a 50 per cent retracement of the massive drop in prices from 2011 to the low in December 2015. The 50- and 200-day moving averages remain supportive, the shorter one especially propping up prices. Two consecutive weekly closes above 3,500 yuan have not increased bullish momentum and the contract is overbought on the relative strength index. Nevertheless, we shall allow for a rally to our second target at the psychological 4,000-yuan area before a proper bout of consolidation sets in. It is worth noting that Dalian iron ore futures are also well bid at the moment.
Nicole Elliott is a technical analyst