Iron ore sank to its lowest level in more than a year, extending a decline that has been fueled by a challenging demand outlook and bearish technical signals.
The existing market softness in iron ore is linked to a challenging demand outlook. A combination of deteriorating sentiment surrounding China's near-term steel demand outlook and bearish technicals fuels selling pressure. Some analysts attribute the decline solely to China's steel demand outlook and bearish technicals, without mentioning any physical trader.
The technical picture has deteriorated rapidly, with the iron ore price carving out a series of lower lows and lower highs. A breakdown from the symmetrical triangle that the price had been coiling within for much of this year marked a decisive shift in sentiment.
The iron ore price now trades beneath the 50, 100 and 200-day moving averages, all of which are sloping lower. Momentum indicators remain firmly bearish, with the MACD continuing to deteriorate. The RSI (14) has fallen to 23, one of its most oversold readings since late 2022, and the price is trading beneath the lower Bollinger Band.
The RSI has fallen to one of its most oversold readings since late 2022.
The break beneath ¥724.90 support in late July accelerated the bearish move, and the price has since sliced through minor support at ¥710. The major support zone is now at ¥683, a level that repeatedly held as support on multiple occasions last year and is now a key level for traders to watch. Below that, the next major support zone is identified at ¥660.
