Let’s have a look today at a metal that recently cleared an important level and that should continue riding its bullish trend. I’m talking about lead. From the lows posted in December last year, lead price has more than doubled. It jumped from $880 (per tonne, point A on the chart) to a last closing price of $1,774.
The retracement on the upside from the lows of last December has been made quickly and without significant consolidation phases. The bullish trend in place is characterized by regular higher lows and higher highs. Both on daily and weekly basis, the current uptrend looks strong and durable.
Actually the price action crossed above two important levels in late May and early June. Those levels were technical resistances. The first level cleared was a previous low (point B, posted in early July 2008) that became then a new high twice (points C and D). It corresponds to a tight zone between $1,525 and $1,550.
The second breakout occurred as the price action rose above the descending line that goes through points 1 and 2, two highs posted in October 2007 and March 2008. It could have been a major prevention of a further rally, but obviously the bulls hold firmly. As those two resistances did not trigger any correction, the price action jumped quickly in June until $1,796.50 (point E).
The pull-back move that followed tested the two resistance levels previously cleared and the price action found some support there. It’s a confirmation that the near future is likely to be on the upside. The indicators remain well oriented and also suggest a continuation of the bullish trend. The medium-term momentum indicator (180 days) has crossed above its 100 line and the MACD is on a positive configuration. The RSI does not show any overbought alert.
In this scenario, the objective now may be $1,950, which correspond to the 38.2% retracement ratio of the decline occurred between points 1 and A (extreme points of the bearish trend). Of course, on the other side, the support is the level of $1,550 points.
