In what has been a painfully slow basing process since May, hope springs back for a rebound in Shanghai rubber prices. A second gentle rounded bottom chart pattern in October caused a strong bullish Marabuzo candle in November, which led to last week’s close at the highest level since early May. On Monday, the market gapped higher, bouncing from support from the sloping trend line, which should now act as support rather than resistance. In turn, this has caused moving averages to cross to bullish, something that must be confirmed at Friday’s close. We continue to favour a rally to 15,000 yuan (US$2,265) per tonne and probably the top of the flat cloud at 15,900 yuan and 16,400 yuan.

Nicole Elliott is a technical analyst