Zhengzhou’s Commodity Exchange has a lot of interesting futures contracts listed. Today we are looking at the chart of the rolling front month terephthalic acid contract, where open interest has increased quite sharply since mid-2016. The name may be unfamiliar but its use in making PET plastic bottles is an all too common sight. Basing activity in 2015 and the first half of 2016 led to the first proper rally. Since the summer the pace has picked up again, gapping higher this week, and we are challenging February’s interim high. Though observed volatility is subdued, bullish momentum has increased significantly this quarter and now the parabolic stop-and-reverse has turned bullish. Plenty of room on the upside.
Nicole Elliott is a technical analyst