Months ago, we pointed out the small rounded base that was forming ahead of the Ichimoku cloud and Fibonacci retracement support, saying it would be completed when Shanghai lead prices managed to break and hold above the 38 per cent retracement level at 19,454 yuan (US$3,065) per tonne. It tried to do so in late January and early February, but slipped and lost its footing last week. We feel this is temporary and that while the 50 per cent retracement support level holds, prices will trade higher after the Lunar New Year holiday, helped by the nine-week moving average. We favour a fairly sharp rally to the 21,000-yuan area and cannot rule out a move to our original target at 21,650 yuan.
