Chart of the day: Putting a polish on aluminium
Sometimes chart analysis works so well one wonders why the connection was not spotted sooner. The Shanghai aluminium futures contracts have been rallying steadily for two consecutive years, hugging the mean regression and keeping within one standard deviation of it. The market had formed an interim base before the end of the year, as expected, against the lower standard deviation, helped by a steeply rising weekly Ichimoku cloud. While lower than we had pencilled in, this is seen as a handy level at which to go long again or add to existing bullish positions. Volume is back down at more normal levels and open interest steady, suggesting sophisticated investors are dominating.
Nicole Elliott is a technical analyst