IO Weekly Technicals Review [2025/06]: Correction Looms
SGX TSI Iron Ore CFR China (62% Fe Fines) Index Futures (“SGX IO Futures”) rose last week, closing USD 2.25/ton higher by 07/Feb (Fri).
SGX IO Futures opened at USD 105.05/ton on 03/Feb (Mon) and closed at USD 107.30/ton on 07/Feb (Fri).
Prices briefly touched a weekly high of USD 107.50/ton on 07/Feb (Fri) and a low of USD 102.00/ton on 03/Feb (Mon). It traded in a range of USD 5.50/ton during the week, which was wider than the prior week.
Prices traded between the pivot point of USD 105.35 and S1 point of 103.85 throughout the week, crossing the R1 point of USD 107.20/ton on Fri and closing above it.
Volume peaked on 07/Jan (Fri) with volume increasing significantly compared to the previous week levels.
Iron Ore Fundamentals in Summary
Dalian iron ore futures reached a four-month high, posting strong weekly gains. The recovery was driven by steel mills resuming production, increased activity in the property sector, and rising Chinese equities after the Lunar New Year.
China filed a WTO complaint against new U.S. tariffs and urged dialogue. While trade tensions remain a concern, steel-related commodities continued to rise, with steelmaking ingredients and Shanghai Futures Exchange benchmarks posting strong gains.
Iron ore futures rebounded as a softer U.S. dollar (-0.4%) made commodities more affordable for global buyers. Additionally, Rio Tinto cleared ships from Western Australian ports due to cyclone threats, adding a risk premium to prices.
China's port IO stockpiles rose by 4.63 million tons (+3.19%) WoW to 149.91 million tons for the week ending 07/Feb per MMI data.
Based on seasonality, SGX IO Futures Mar contract trades 17.3% below its last 5-year average (USD 125.16/ton).
Short-Term Moving Averages Signal Bullish Trend, But Correction Looms
Formation of a golden cross on 17/ Jan (Fri) followed by upward trend for three weeks indicating that the bullishness may sustain in the near term. Prices are trading above both the short-term moving averages.
Long-Term Averages Indicate Convergence of Moving Averages
IO prices crossed and closed significantly above the 200-day DMA. Signaling a strengthening bullish trend as prices beats the 200-day DMA, with a probability of convergence between long-term moving averages.
MACD Signals Bullish Momentum; RSI Inching Towards Overbought Zone
The MACD signals a positive momentum starting from 14/Jan with growing bullishness observed last week. Meanwhile, the RSI is at 65.08, is inching towards the overbought zone and it hovers above the midpoint, with its RSI-based moving average at 60.97.
Volatility Rose, Price Closed Above 50% Fibonacci Level
Volatility gained upward momentum late in the week. Prices traded between the 38.2% Fibonacci level (USD 103.10/ton) and the 61.8% level (USD 107.62/ton), closing below the 61.8% Fibonacci level. Going forward, 61.8% Fibonacci level (USD 107.62/ton) may act as resistance, with 50.0% Fibonacci level (USD 105.36/ton) as support.
Buying Pressure Intensified, Price Trading Near the Upper-Bollinger Bands
Buying pressure has intensified in the later part of the week according to the Accumulation/Distribution (A/D) indicator. The price is trading between the upper-volume node and basis-volume node, closing the week near the upper-volume node.
IO Prices Rise Towards CNY & Then Decline Thereafter
Between 2021 & 2024, SGX IO futures prices have risen leading up to the Chinese New Year before tapering off ten trading days after the holiday. Prices declined before & after CNY holidays only in 2024 while prices continued to rise even after CNY before falling sharply in 2021 & 2022.
A similar trend was observed in the ten-day period leading up to CNY 2025.
IO Futures Only Aggregate Exposure
Financial Institutions (FIs) are net long with 136.6k lots across all futures expiries. Managed Money participants, Physicals participants and Others are net short with 15.5k, 103.5k and 17.3k lots respectively across all futures expires. Managed Money decreased net short positions, Physicals increased net short positions while FIs decreased net long positions last week. Overall futures open interest was 1,179,418 lots as of 31/Jan stood at lots (-3.5%) while it was 1,222,981 lots as of 24/Jan.
IO Futures & Options Aggregate Exposure
Financial Institutions (FIs) are net long with 133.2k lots across all futures & options expiries. Managed Money participants, Physicals participants and Others are net short with 7.0k, 106.9k and 19.2k lots respectively across all futures and options expires. Managed Money decreased net short positions, Physicals increased net short positions while FIs decreased net long positions last week. Overall futures and options open interest was 1,421,263 as of 31/Jan stood at lots (-5.2%) while it was 1,499,318 lots as of 24/Jan.
Historical Futures Aggregate Exposure by Market Participants
Physical participants have switched from net long to net short over the last three weeks. Managed Money participants have maintained net short positions for the past month. Financial Institutions continue to hold net long positions since the second quarter of this year.
Hypothetical Trade Setup
Prices are currently trading above short-term moving averages and significantly above both long-term moving averages, hovering near the upper Bollinger Band, which suggests potential resistance at these levels. Historical trends indicate a pattern of price declines in the last three days of the 10-day period following the Chinese Lunar New Year, a movement that could potentially repeat this year. While managed money participants have reduced their short positions over the past two weeks, signaling a more optimistic outlook, we take a contrarian view and recommend a short position strategy this week, anticipating a potential price correction from current levels.
The hypothetical trade setup involves entering a short position at USD 107.6/ton with a take profit level at USD 104.3/ton combined with a stop loss at USD 109.0/ton resulting in a 2.35x reward-to-risk ratio.
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
SGX IO Futures opened at USD 105.05/ton on 03/Feb (Mon) and closed at USD 107.30/ton on 07/Feb (Fri).
Prices briefly touched a weekly high of USD 107.50/ton on 07/Feb (Fri) and a low of USD 102.00/ton on 03/Feb (Mon). It traded in a range of USD 5.50/ton during the week, which was wider than the prior week.
Prices traded between the pivot point of USD 105.35 and S1 point of 103.85 throughout the week, crossing the R1 point of USD 107.20/ton on Fri and closing above it.
Volume peaked on 07/Jan (Fri) with volume increasing significantly compared to the previous week levels.
Iron Ore Fundamentals in Summary
Dalian iron ore futures reached a four-month high, posting strong weekly gains. The recovery was driven by steel mills resuming production, increased activity in the property sector, and rising Chinese equities after the Lunar New Year.
China filed a WTO complaint against new U.S. tariffs and urged dialogue. While trade tensions remain a concern, steel-related commodities continued to rise, with steelmaking ingredients and Shanghai Futures Exchange benchmarks posting strong gains.
Iron ore futures rebounded as a softer U.S. dollar (-0.4%) made commodities more affordable for global buyers. Additionally, Rio Tinto cleared ships from Western Australian ports due to cyclone threats, adding a risk premium to prices.
China's port IO stockpiles rose by 4.63 million tons (+3.19%) WoW to 149.91 million tons for the week ending 07/Feb per MMI data.
Based on seasonality, SGX IO Futures Mar contract trades 17.3% below its last 5-year average (USD 125.16/ton).
Short-Term Moving Averages Signal Bullish Trend, But Correction Looms
Formation of a golden cross on 17/ Jan (Fri) followed by upward trend for three weeks indicating that the bullishness may sustain in the near term. Prices are trading above both the short-term moving averages.
Long-Term Averages Indicate Convergence of Moving Averages
IO prices crossed and closed significantly above the 200-day DMA. Signaling a strengthening bullish trend as prices beats the 200-day DMA, with a probability of convergence between long-term moving averages.
MACD Signals Bullish Momentum; RSI Inching Towards Overbought Zone
The MACD signals a positive momentum starting from 14/Jan with growing bullishness observed last week. Meanwhile, the RSI is at 65.08, is inching towards the overbought zone and it hovers above the midpoint, with its RSI-based moving average at 60.97.
Volatility Rose, Price Closed Above 50% Fibonacci Level
Volatility gained upward momentum late in the week. Prices traded between the 38.2% Fibonacci level (USD 103.10/ton) and the 61.8% level (USD 107.62/ton), closing below the 61.8% Fibonacci level. Going forward, 61.8% Fibonacci level (USD 107.62/ton) may act as resistance, with 50.0% Fibonacci level (USD 105.36/ton) as support.
Buying Pressure Intensified, Price Trading Near the Upper-Bollinger Bands
Buying pressure has intensified in the later part of the week according to the Accumulation/Distribution (A/D) indicator. The price is trading between the upper-volume node and basis-volume node, closing the week near the upper-volume node.
IO Prices Rise Towards CNY & Then Decline Thereafter
Between 2021 & 2024, SGX IO futures prices have risen leading up to the Chinese New Year before tapering off ten trading days after the holiday. Prices declined before & after CNY holidays only in 2024 while prices continued to rise even after CNY before falling sharply in 2021 & 2022.
A similar trend was observed in the ten-day period leading up to CNY 2025.
IO Futures Only Aggregate Exposure
Financial Institutions (FIs) are net long with 136.6k lots across all futures expiries. Managed Money participants, Physicals participants and Others are net short with 15.5k, 103.5k and 17.3k lots respectively across all futures expires. Managed Money decreased net short positions, Physicals increased net short positions while FIs decreased net long positions last week. Overall futures open interest was 1,179,418 lots as of 31/Jan stood at lots (-3.5%) while it was 1,222,981 lots as of 24/Jan.
Source: SGX
IO Futures & Options Aggregate Exposure
Financial Institutions (FIs) are net long with 133.2k lots across all futures & options expiries. Managed Money participants, Physicals participants and Others are net short with 7.0k, 106.9k and 19.2k lots respectively across all futures and options expires. Managed Money decreased net short positions, Physicals increased net short positions while FIs decreased net long positions last week. Overall futures and options open interest was 1,421,263 as of 31/Jan stood at lots (-5.2%) while it was 1,499,318 lots as of 24/Jan.
Source: SGX
Historical Futures Aggregate Exposure by Market Participants
Physical participants have switched from net long to net short over the last three weeks. Managed Money participants have maintained net short positions for the past month. Financial Institutions continue to hold net long positions since the second quarter of this year.
Source: SGX
Hypothetical Trade Setup
Prices are currently trading above short-term moving averages and significantly above both long-term moving averages, hovering near the upper Bollinger Band, which suggests potential resistance at these levels. Historical trends indicate a pattern of price declines in the last three days of the 10-day period following the Chinese Lunar New Year, a movement that could potentially repeat this year. While managed money participants have reduced their short positions over the past two weeks, signaling a more optimistic outlook, we take a contrarian view and recommend a short position strategy this week, anticipating a potential price correction from current levels.
The hypothetical trade setup involves entering a short position at USD 107.6/ton with a take profit level at USD 104.3/ton combined with a stop loss at USD 109.0/ton resulting in a 2.35x reward-to-risk ratio.
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
Trade chiuso manualmente
In this paper, we highlighted a short position on iron ore futures at USD 107.6/ton, which is currently profitable with prices at USD 106.15/ton as of February 13. However, with Severe Tropical Cyclone Zelia intensifying to category 5, the risk of supply disruptions from Australia increases, posing an upside risk to iron ore prices. Given these updated market dynamics, it may be prudent to close the short position.
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Pubblicazioni correlate
Declinazione di responsabilità
Le informazioni ed i contenuti pubblicati non costituiscono in alcun modo una sollecitazione ad investire o ad operare nei mercati finanziari. Non sono inoltre fornite o supportate da TradingView. Maggiori dettagli nelle Condizioni d'uso.