The front-month iron ore futures contract on the Dalian Commodity Exchange has been grinding against long-term support for 10 weeks or so. The gentle upward-sloping trend line taken from the record low in December 2015 has almost captured all recent lows – except the dragonfly doji, which itself denotes instability. A second dragonfly last week has seen the first attempt at rallying from Fibonacci retracement support, which coincides with a cluster of lows in the second and third quarters of last year. From oversold on the RSI for ages, this now looks set to move higher and the MACD is poised to turn bullish. We shall pencil in a rally to the area between 570 yuan (US$84) and 600 yuan per tonne.

Nicole Elliott is a technical analyst