Chart of the day: Shanghai steel rebar futures shine
Rather sooner than expected, Shanghai steel rebar futures have broken above the 50-day moving average to retest the psychological resistance level of 4,000 yuan (US$586) per tonne. Open interest has also risen, suggesting many are participating in the latest rally and, though relatively low, momentum is clearly bullish. Therefore, we shall continue with our positive outlook and expect further rallies this year, possibly as soon as this month, with a weekly close above 4,000 yuan targeting the next area of resistance at about 4,500 to 4,625 yuan. Based on the height of the large right-angled triangle that has been building since late last year, a squeeze to 4,900 to 5,000 yuan cannot be ruled out and will probably take foreign investors by surprise.
Nicole Elliott is a technical analyst