Accelerated Rollovers, Bearish Signal, Awaiting Key Developments Market Review & Analysis

Yesterday’s market rally was primarily driven by strong expectations for major meetings in December and a significant decline in the US Dollar Index, which supported a broad increase in commodities. As the last trading day of November, institutional funds engaged in portfolio rebalancing and rollover activities, accelerating the contract rollover process. Daily rollover volumes exceeded 100,000 lots, double the usual amount. Currently, the open interest for the May 2024 (05) contract stands at 800,000 lots, while the January 2024 (01) contract holds 1.06 million lots. It is anticipated that the rollover will be completed next week, making the 05 contract the primary driver of market trends.

Technical Overview
A classic “Hanging Man” candlestick pattern emerged yesterday, with an upper shadow of 36 points, a real body of 9 points, and a lower shadow of 4 points. This pattern indicates significant resistance above current levels, with bulls facing strong pressure. Technically, 3,350 is a key resistance level to watch, and the market’s ability to break through this level will be critical.

Fundamentals & International Dynamics
On the supply-demand front, both production and demand have weakened, resulting in a “dual weakness” scenario with no significant imbalances. Current inventories remain at low levels, with increased hot-rolled coil sales partially offsetting reduced demand for rebar. However, inventory accumulation is expected in December, shifting the focus to the “winter stockpiling price negotiations” between steel mills and traders. On the international stage, the fading influence of Trump-related trades and the weakening US Dollar Index continue to provide favorable conditions for global commodities.

Operational Strategies

  1. Maintain a cautious approach until rollovers are completed, avoiding hasty trades.
  2. Monitor the 3,350 resistance level and consider short opportunities if the price approaches this level.
  3. Pay close attention to potential market fluctuations driven by winter stockpiling price negotiations in mid-to-late December.

📈 Wishing you successful trades and strategic patience as opportunities unfold!

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