Early this year, many analysts had written off the chance of huge price rises for base metals because of a slowing economy in China. Ironically, many have done rather well, with lead futures on the Shanghai Futures Exchange powering towards December’s record high of 23,200 yuan (US$3,529) per tonne. Volumes this year have been significantly higher than before and open interest has picked up since June. Though overbought, we feel further sharp gains are still possible because momentum is almost as bullish as in November last year. This is also backed by the fact that the lagging line has been given a boost again by the candles of 26 days ago.

Nicole Elliott is a technical analyst