TOKYO, Sept 16 (Reuters) – Benchmark Tokyo rubber futures are resuming an uptrend, after forming a rectangular chart pattern since prices hit six-week lows earlier this week.
The Tokyo Commodity Exchange rubber contract for February 2010 delivery has been in a rectangle formation bounded by support at 192-193 yen and resistance around 211-212 yen that has developed since August.
For a graphic showing the pattern. click:
http://graphics.thomsonreuters.com/099/JP_RBR0909.gif
The market has tested these horizontal lines twice in August, forming two triangles, and now a third try is about to be completed, suggesting a break through the resistance is imminent, said Masato Miyanaga, a senior adviser at H.S. Futures in Tokyo.
“The market has tested the support level three times and is rebounding, signalling the start of a bull trend,” he said.
Since August, prices were confined to the rectangle formation, which reflected a pause in a trend as bears and bulls were in a tug-of-war and supply and demand were balanced.
Miyanaga said if prices break above 211-212 yen again, it will pave the way for an upside target of 230 yen — double the height of the rectangle — the gap between resistance and support.
If closing prices fall below the support line around 192-193 yen for two consecutive days, then it is time to cut losses and close out long positions, he said.
Key rubber futures prices were up 6.1 yen at 203.1 yen on Wednesday.

Source: Reuters

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