There is more to being overbought
September 29, 2021 Leave a comment
Prices can stay ‘overbought’ for a long time.
In the chart below, the price of Hot Rolled Coil Steel (HRC) has been registering a RSI ‘overbought’ signal for 51 consecutive weeks.
The bands either side of the HRC price represent 3 standard deviations either side of its rolling weekly mean and the faint line hovering near the $850 mark is its 200 week moving average.
Albeit HRC is now trading at 122% above the 200wma and its price chart resembles a parabola, it hasn’t breached a 3 standard deviation level. It’s not registering the ‘extremes’ that I look for.
LNG prices on the other hand are blinking an interim peak and suggest a meaningful mean reversion.
LNG prices are trading at higher extremes than the already overbought Natural Gas price.
Look out for the next post.
September 29, 2021
by Rob Zdravevski
rob@karriasset.com.au
rob zdravevski's blog 