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Rubber Golden Cross Signals Rally Continues: Technical Analysis

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Aug. 20 (Bloomberg) -- Rubber, which advanced 18 percent from a nine-month low reached in June, may extend the rally as moving averages formed a “golden cross,” according to technical analysis by Fujitomi Co.

The 20-day moving average for futures on the Tokyo Commodity Exchange climbed above the 50-day measure this month, signaling rubber gained upward momentum, said Kazuhiko Saito, chief analyst at the Tokyo-based broker. The golden cross forms as a short-term moving average rises above a long-term gauge.

“The market is getting better technically,” Saito said yesterday. “It may still need some improvement in fundamentals, such as a recovery in Chinese demand to end a bear trend.”

The commodity entered a bear market in April as imports by China, the biggest user, fell 21 percent in the April-June quarter from a year ago.

Another bullish signal is rubber’s advance after touching the lowest since Sept. 7. in June, recouping more than half the drop that it posted from the May high of 299 yen through the June low of 223.9 yen, he said. The contract for delivery in January was at 264.3 yen at 11:56 a.m. in Tokyo.

In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.

To contact the reporter on this story: Aya Takada in Tokyo at atakada2@bloomberg.net

To contact the editor responsible for this story: Brett Miller at bmiller30@bloomberg.net