Chart of the day: Iron ore’s turn to stage rally
While other base metals on Chinese exchanges have seen phenomenal rallies in the past few weeks, Dalian iron ore remains relatively subdued with observed volatility stuck at this year’s average. Nevertheless, the chart looks very interesting technically and there is certainly room for it to play catch-up. This week’s break above pivotal resistance at 570 yuan per tonne is significant, completing a very big inverted head-and-shoulders pattern that has been forming since the beginning of last year. The fact that it coincides with Fibonacci 38 per cent retracement resistance adds weight to this level. If the break is sustained (unlike the one in the middle of November), we would expect a rush to the measured target at 840 yuan.
Nicole Elliott is a technical analyst