Rubber Exiting Ichimoku Cloud Extends Rally: Technical Analysis

Rubber futures in Tokyo may advance about 7 percent by the end of this year after climbing above a so-called Ichimoku cloud this month, according to technical analysis by research company JSC Corp.

The most-active contract on the Tokyo Commodity Exchange Dec. 2 settled at 275.3 yen a kilogram, breaking through the upper end of the cloud for the first time since October, Takaki Shigemoto, an analyst at the Tokyo-based company, said yesterday in a telephone interview. The breach indicates the market regained upward momentum, he said.

The Ichimoku method, developed by Goichi Hosoda in the late 1930s before he released the findings in the 1960s, analyzes midpoints of historic highs and lows, with a breakout from above or below the cloud pointing to a trend.

“Futures are set to test the September high of 290.3 yen in the near term, and may top the May peak and reach 300 yen by the end of the year,” Shigemoto said.

The 50-day moving average is nearing the cloud after breaking through the lower end of the chart last month, another signal that prices will rally, he said.

Rubber entered a bull market in August as a weaker yen and signs that China’s economy is gaining strength boosted demand. The contract for May delivery traded at 280.6 yen a kilogram ($2,718 a metric ton) at 10:44 a.m. in Tokyo, up 24 percent from the year’s lowest settlement 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.

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