At this time of the year, when parts of the northern hemisphere become very cold, our thoughts turn to keeping people warm. Coking coal is used to produce iron and steel, whereas thermal coal is for the generation of heat and electricity, and the Zhengzhou Commodity Exchange trades futures on the latter. While not one of the most active on the exchange, partly because sideways consolidation since the Lunar New Year has kept volatility at a record low, the contract has perked up recently. After it stormed higher last year, a mean regression has been established at about 620 yuan (US$94) per tonne. The weekly Ichimoku cloud has caught up with prices and provided support since July. We are now testing the upper two-standard-deviation line. If this level is broken, the next target will be 840 yuan.

Nicole Elliott is a technical analyst