In the past few week’s we’ve highlighted some assets and indicators that point to a stable/improving economy: Copper prices, firmer interest rates, etc. Time to add one more to the list: rising steel prices.
Today we’ll look at a chart of the VanEck Vectors Steel ETF (NYSEARCA:SLX).
Looking at the chart below, investors can see that the Steel ETF (SLX) remains inside its rising trend channel. As long as this remains the case, it’s bullish. But there’s more. A big test is looming for steel bulls. SLX is now testing this year’s price highs (see points 1 & 2 on the chart). This “breakout test” is particularly important because it comes as steel prices (SLX) are straddling the lower side of the rising trend channel.
Implications: A steel ETF breakout here would be huge for steel bulls and keep the bullish trend channel intact. For that to happen, the bulls want to see a price breakout above the prior highs on a closing basis (and preferably on strong volume). Note that a breakout here would target $50 next (the 2013 & 2014 highs).
On the flip side, a price reversal here would signal caution… especially if the rising trend line is broken to the downside and steel prices (SLX) fall out of the rising trend channel.