The front-month lead contract on the Shanghai Futures Exchange kicked off with a bang over the “golden week” holiday last week. Closing well above previous resistance on Friday before the vacation, it was off to the races back to work on Monday. Trading up to 15,930 yuan per tonne, the contract was at its most expensive in four years. Though overbought on the RSI, momentum is at its most bullish ever, as is the MACD, confirming the previous positive golden cross on the 50- and 200-day moving averages. Volume is good and open interest soaring, which lead one to expect further rallies for at least another month. The next stop is seen at 16,200 to 16,500 yuan.
Nicole Elliott is a technical analyst