Dec. 19 (Bloomberg) -- Steel reinforcement-bar futures in Shanghai may climb about 7 percent in the next six months to levels last seen in July as technical patterns indicate a buy signal, according to Huawen Futures Co.
Tom DeMark’s Sequential indicator, designed to identify trend exhaustions and anticipate reversals, gave a buy signal on Dec. 14, when prices rose 2.8 percent, and now targets 4,100 ($658) yuan a metric ton in June, said analyst Wang Yaoyao.
The most-active contract on the Shanghai Futures Exchange rose to 3,841 yuan yesterday, the highest since July 19, on speculation that an increase in lending in China, the biggest user, will boost demand for the product used to strengthen concrete in building construction. Futures traded at 3,818 yuan a ton at 10:15 a.m. in Shanghai.
“We’re seeing the uptrend in early December continuing, with the first target level at 3,918 yuan and then 4,100 yuan,” Wang said.
Technical analysts observe price charts to forecast resistance levels, or ceilings restricting price increases, and support levels, or floors limiting declines. The trading patterns and prices are used to predict changes in a security, commodity, currency or index.
To contact Bloomberg News staff for this story: Helen Sun in Shanghai at firstname.lastname@example.org
To contact the editor responsible for this story: James Poole at email@example.com