The May daily chart shows a fresh contract high reached for a second straight day, although Jan. 28 move was met with resistance due to noncommercial profit-taking that led to the first lower close for the week. The May ended $7.50/mt lower at $670.70/mt. While today’s close remains solidly above the contract’s 20-day moving average at $653.20/mt and the 50-day at $612.70/mt, today’s price action did print a bearish outside-day trading bar, trading both higher and lower than the Jan. 27 trading range, while closing lower, a bearish signal.
The histogram bars of the first study shows the daily volume of 10,983 contracts, slightly below the average of the past four sessions, while it should be noted that the Jan. 28 volume that led to a losing session exceeded the Jan. 27 volume that resulted in a higher close.
The brown line on the second study shows the May/July spread weakening $2.10/mt this session to a $25.60/mt inverse, signaling a slightly less bullish view of fundamentals. This spread has more than doubled from the $12.20/mt inverse shown on Jan. 22 to a high of $27.70/mt high reached on Jan. 27.
The lower study shows the stochastic momentum indicators potentially rolling over while in the neutral zone on the chart. This is not the most bearish of turns, which are reserved for a change in direction while in overbought territory or above 80 on the chart.
While the Jan. 28 price action could be little more than normal price move in a continued uptrend, these signals do bear watching.
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