Rubber’s upward trend that started in June may take the commodity as much as 12 percent higher by Dec. 31, according to technical analysis by JSC Corp.
The most-active contract on the Tokyo Commodity Exchange entered the Ichimoku cloud pattern this month, signaling futures will find a floor after retreating 7.5 percent from a three-month high reached in September, said Takaki Shigemoto, an analyst at the Tokyo-based research company. The 50-day moving average was around the upper end of the cloud, indicating the medium-term trend remains upward.
The 50-day average neared the 200-day average after surpassing 150-day average last month, forming a golden cross, he said. A golden cross forms when a short-term moving average rises above a long-term measure and is seen as a bullish indicator.
“After confirming a floor, futures will resume a rally toward 300 yen,” Shigemoto said in a telephone interview on Oct 11.
Rubber entered a bull market on Aug. 26 as a weaker yen and signs that China’s economy is gaining strength boosted demand for the commodity used in tires. The contract for March delivery traded at 268.7 yen a kilogram ($2,724 a metric ton) at 9:14 a.m. in Tokyo, recovering 18 percent from the year’s lowest close on June 26.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index. The Ichimoku chart analyzes midpoints of historic highs and lows, or so-called resistance and support levels, with a breakout from above or below the cloud pointing to a trend.
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